There’s a minor crisis brewing between the United States and its allies in Europe over this country’s dirty little secret: increasing trade with Iran. While the United States has talked loudly and carried a big stick about sanctions against Iran since the 1979 revolution there — and continued the pressure over the potential of Iran developing nuclear weapons — US trade is on the increase.
Europe cuts trade, while US increases it
This is angering Europeans, who have followed the lead of the United States in this regard, despite their own best trade interests. The European Union has always been a more active trading partner with Iran. In fact, since 2011, Europe’s trade has decreased by a whopping 77 percent. This is in contrast to that of the United States, which has increased its exports during this same period by 35 percent, according to Bloomberg Businessweek.
While Europe still does more trade with Iran overall, this rise in US trade while sanctions are supposed to be in place is weakening European resolve to maintain those sanctions. Europeans perceive that the US is seeking an unfair economic advantage, while European companies lose out on sales in the meantime.
Although the US only trades in what it considers to be “humanitarian” goods with Iran, that’s increasingly becoming a catch-all for many categories, including agricultural exports like rice (which traded at record levels last year, according to US Census figures).
European voices, complaints about banking
Several prominent Europeans have made their unhappiness known. Among them is the UK’s Jack Straw, former Foreign Secretary and currently a member of the European Parliament focused on Iran, who has suggested that the “double standard” is causing a major rift in the international community over US behavior.
Also crying “foul” is French banking powerhouse BNP Paribas, which now faces a potential US fine of as much as $10 billion for trading with sanctioned nations like Iran. Noted one French leader, “Washington has the annoying habit of trying to apply its laws outside its jurisdiction and use its strength for commercial ends.”
Other complaints by Europeans center around the fact that US companies can obtain waivers (so-called “letters of comfort”) for trading with Iran that will prohibit a banking fine when the money comes through the US banking system. There is no such “out” for European companies, however.
Overall, this has led to the perception among allies that the US says one thing, and does quite another when it suits its own financial interests.
Why it matters what Europe thinks
In addition to creating a rift with the US’s most important allies, this situation isn’t good for anyone. Europeans feel they are being hood-winked, and as relations improve with Iran (during nuclear negotiations in Geneva), they will be less likely to abide by US requests.
This solidarity is also critical for any future united front (example: Ukraine) that might arise in the future. We are stronger when the US and Europe stick together. If the US wants to ease sanctions and do more business with Iran, it needs to be forthright about that, instead of risking our most valuable alliance.