A gambit by Brussels to use European Investment Bank funding to shore up the Iran nuclear deal is purely symbolic, EU officials have admitted, amid fears that US sanctions could push the multilateral lender into default.
President Donald Trump pulled the US out of the landmark accord – which saw sanctions against Tehran lifted in return for curbs on its nuclear programme – in May.
Washington has since told countries they must stop buying the OPEC producer’s oil from November 4 or face financial consequences.
The other signatories — Britain, France, Germany, China and Russia — have vowed to stay in the deal but appear powerless to stop their companies pulling out of Iran for fear of US penalties.
Such secondary sanctions could hit European businesses and shut the European Investment Bank (EIB) out of dollar markets, forcing it to default on payments.
The European Commission trumpeted EIB support for EU investment in Iran as a reason for Tehran to abide by the nuclear deal. But the EIB, which is independent, told The Telegraph “it cannot support projects in Iran under the current circumstances.”
The president’s decision to pull out of the Iran deal was greeted with almost universal outcry among world leaders, and particularly by the EU.
The Commission, with Britain’s support, moved to prop up the nuclear deal as best it could in a bid to convince Iran not to pull out of the deal as well.
As well as announcing measures to legally protect European companies active in Iran and ban them from complying with US sanctions, the commission said it would change the rules governing the EIB so it could de-risk EU investment in the country.
The EIB de-risks investment to convince the private sector to back projects, which support EU policy objectives, in sectors investors would otherwise find hard to finance. It is able to do this thanks to its AAA credit rating, which would come under threat were it to default.
“This enabling measure does not however commit the EIB to actually support projects in Iran. Any activity of the EIB in Iran would require a decision of the governing bodies of the EIB before it could be considered,” an EIB spokesman said.
A European Commission spokesperson also confirmed that the change to the rules it has called for would not force the EIB to support investment in Iran.
Asked if the move was symbolic, one well-placed EU source said “Yes”. But, the source added, it would allow de-risking in the future if the US-EU stand-off deescalated.
Nigel Farage, Ukip’s former leader and an ally of Mr Trump, said it was “beyond comprehension" that the EU was considering opening up lending in Iran. "The Trump administration will take a very dim view of this,” he told The Telegraph.
But the deal looked in further doubt yesterday as its remaining signatories failed to persuade Tehran in a summit in Vienna that they would be able to fully compensate for economic losses caused by the US exit.
Hassan Rouhani, Iran’s president, told French President Emmanuel Macron in a phone call before the meeting that the package as it stood fell short of their demands.
Federica Mogherini, the EU foreign policy chief who is chairing the summit, said the world powers and Iran had agreed to continue talking, including on economic measures.
European diplomats, however, privately questioned whether they could do enough to keep Tehran onboard.
"We’ve made some progress, including on safeguarding some crude (oil) sales, but it’s unlikely to meet Iranian expectations," said one senior official.