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Europe Wants To Continue Doing Some Business With Iran Despite U.S. Sanctions


The U.S. has blamed Iran for recent attacks on ships and wants to isolate it from the rest of the world. Iran says it's ramping up its nuclear program again. Stuck in the middle of all this is Europe. It wants to maintain at least some business with Iran despite U.S. sanctions. NPR's Deborah Amos reports from Berlin on the Europeans' plan to do that.

DEBORAH AMOS, BYLINE: Europeans are wary of American claims that Iran is blowing up oil tankers but much more wary of Washington's hawkish policies - pulling out of the nuclear deal and reimposing sanctions to squeeze Iran's oil imports to zero. Europe isn't business surprised by Iran's reactions, says Volker Perthes, the head of a German government think tank on international security.

VOLKER PERTHES: People here, as well as in other EU capitals, have been expecting the Iranians to show that they are able to resist. If you have them in the corner, there is probably not much choice but to kick and bite and a little bit of that I guess we are seeing.

AMOS: The 2015 nuclear deal is still backed by European capitals. Iran is pressing Europe to do something to ease punishing U.S. sanctions. The something Europe has proposed is a new channel for limited trade that bypasses the U.S.-led financial system. It's called INSTEX, headed by a German banker based in France with the U.K., France and Germany as partners. It's an unprecedented step, says analyst Volker Perthes.

PERTHES: We don't think it is up to the United States to tell us whom to trade with. So INSTEX in the end could be a trial run for doing business outside the dollar zone.

AMOS: But Iran accuses Europe of dragging its feet and has ramped up pressure by threatening to pull out of the nuclear deal altogether if it doesn't get any economic benefits. Rouzbeh Parsi, a Swedish academic and Iran specialist, says it's not a surprise that creating the INSTEX system takes some time.

ROUZBEH PARSI: The reason why this is complicated is because no one has ever done it before.

AMOS: INSTEX is not a bank, he says. It's based on barter with the exchange of goods between countries. Then the producers are paid from piles of cash set up in their home countries in Europe and in Iran.

PARSI: So it's a kind of a bartering mechanism that allows two institutions to facilitate trade without actually transferring any money from one side of a border to the other.

AMOS: But even so, trade with Iran will be limited to food and medicine, not oil, a concession to the Trump administration that's threatened to sanction INSTEX out of business if Iranian oil is part of this barter deal. It's a limit that's unacceptable to Tehran. Iran's supreme leader has called INSTEX a bitter joke. Tobias Schneider, a German analyst, says the Europeans know that in the end, the U.S. market is more important than any trade deal with Iran. So far, no European company has stepped up to take the risk.

PARSI: And I think frankly in the context of Iran, it's very, very clear who everybody's choosing.

AMOS: And it's not Iran.

TOBIAS SCHNEIDER: No, of course, not. I mean, we would be crazy. Everybody on the continent, be they private enterprise, be they governments, knows that in the end the United States is where we're anchored.

AMOS: It's an anchor that's grown heavier under the Trump administration, he says, as European fears grow that Washington's policies strengthen Iran's hard liners and a miscalculation in Washington or in Tehran could lead to war. Deborah Amos, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.

Deborah Amos covers the Middle East for NPR News. Her reports can be heard on NPR's award-winning Morning Edition, All Things Considered, and Weekend Edition.