US tries to force other countries to follow its sanctions against Iran

The US special envoy to Iran Brian Hook spent the last week spreading the idea that Iran was a threat to the US and the world. Now, Hook is threatening other nations directly.

Choose to do business with the US or Iran

Hook is now warning that if countries do business with Iran they will not be able to do business with the US. In particular Hook warned the EU about trading with Iran.

The P5 +1 nations

Wikipedia describes the P5 +1 nations: "The P5+1 refers to the UN Security Council's five permanent members (the P5); namely China, France, Russia, the United Kingdom, and the United States; plus Germany. The P5+1 is often referred to as the E3+3 by European countries. It is a group of six world powers which, in 2006, joined together in diplomatic efforts with Iran with regard to its nuclear program."

The US withdrew from the agreement with Iran. However France Russia and Germany all members of the EU are put in a difficult position as the Iran deal gives it relief from sanctions. Now the US is demanding that the three countries implement US sanctions. This is an extraterritorial application of laws that apply only to the US. The US is not just itself refusing to trade with Iran but demanding that everyone else do so as well. Hook says that the US will sanction any country that tries to purchase Iranian oil.

The EU attempt to circumvent US power

Most financial arrangements arising from trading go through what is called the SWIFT system. This is described by Wikipedia as follows: "The Society for Worldwide Interbank Financial Telecommunication (SWIFT), legally S.W.I.F.T. SCRL, provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. SWIFT also sells software and services to financial institutions, much of it for use on the SWIFTNet network, and ISO 9362. Business Identifier Codes (BICs, previously Bank Identifier Codes) are popularly known as "SWIFT codes". The majority of international interbank messages use the SWIFT network. As of 2015, SWIFT linked more than 11,000 financial institutions in more than 200 countries and territories, who were exchanging an average of over 32 million messages per day (compared to an average of 2.4 million daily messages in 1995). "

While SWIFT itself is neutral, the US will be able to see if banks are trading with Iran if transactions go through it and the US can take action against the bank by cutting off any business with the US. US threats frighten the banks so the EU has developed a clearing house that will allow trade with Iran without money crossing borders. With no role for the banks SWIFT is not involved either.

US threats may not be enforceable

China is continuing to buy oil from Iran despite US warnings about doing so. Other countries that need Iranian oil such as India may follow suit.

If the EU is to convince Iran to stay in the nuclear agreement it must continue trade in spite of the threats of the US. The US is creating a great deal of friction with its policies. It may end up not only creating new financial systems to avoid US power in the financial area but also encourage the use of monetary units other than the dollar in international trade. China and Russia have already agreed to trade in their national currencies.

Previously published  in the DIgital Journal