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The United States has long used its economic and financial power to pursue its foreign policy goals. These interventions have often interfered in the activities of foreign companies and have sometimes frustrated the closest allies of the United States.
But last week, the European Union announced a new plan to escape Washington.
Federica Mogherini, the top diplomat of the European Union, said the bloc was setting up a "special payment entity" that would protect non-US companies from US economic action against the United States. Iran. President Trump has abandoned this year his nuclear deal with Iran, including France, Germany, Britain, Russia and China, and his government has reimposed sanctions while He is seeking concessions from Tehran.
The EU project of creating a money transfer system to help Iran raises big questions. Amongst these: Can this entity help maintain a significant volume of trade with Iran? Can it be protected from the financial tricks of the United States? Will it be necessary for two of America's biggest opponents, China and Russia, to have a great need for them to function?
The stakes are high for both sides.
The Trump administration should be able to fight against any attempt at financial support from Iran. The Treasury Department said this week in an email that the European effort was being monitored: "We will carefully consider the alternative measures envisaged to circumvent our sanctions and are convinced that we will be able to prevent fraud." "Disastrous policy."
But the European Union is eager to show that Mr Trump can not undermine the most important achievements of his foreign policy. Defending the agreement with Iran is an opportunity to do exactly that. The European Union sees the new system as a means of maintaining trade with Iran, partly to help prevent the country's fragile economy from sinking into space.
The mechanism has a simple purpose, if not an execution: to provide a way for companies to transfer money to and from Iran when Western banks do not. He also faces a lot of skeptics.
Some analysts said that the European Union probably did not expect a complete development of the payment system. Instead, they said, the mechanism is more of a gesture on the part of Europe to persuade Iran to stick to the nuclear deal.
But others said the United States should not underestimate the commitment of Europeans, particularly that of Ms Mogherini, who is involved in the 2015 negotiations to limit the Iranian nuclear program.
"She is the one who has signed the nuclear deal on the European side," said Jacob Funk Kirkegaard, Principal Investigator at the Peterson Institute for International Economics. "The means of payment is not a simple political gesture. For her, it's a lot more personal. "
The main challenge of the European effort may be that the big Western companies will no longer need the payment entity because they will simply not do business with Iran. Many multinational companies have withdrawn from Iran after the withdrawal of the United States from the nuclear agreement and do not want to risk sanctions.
"We do not want to take the risk that Total is torpedoed by President Trump," said Patrick Pouyanné, General Manager of the French oil company Total, in an interview.
Total had planned to invest in Iran, but suspended its plans this year. For many large companies, ancillary concerns, such as the possibility of obtaining insurance coverage for their shipments, have played a role.
"For us, it does not work, I'm sure," said Pouyanné to the question about the payment entity.
Financial risks, as well as reputation, abound. Multinational companies recall the the heavy fines and hot headlines that European banks suffered a few years ago to dispel accusations that they would have escaped US sanctions on Iran. It has been reported this week that US authorities could soon hit Standard Chartered, a UK bank, with new penalties related to past activities in Iran.
And France has added another twist to its relations with Iran this week: it has frozen the assets of the Iranian spy ministry after linking it to a foiled bomb plot scheduled for June. France claims that it can punish Iran for its hostile acts while remaining in the nuclear deal. The Trump administration has decided that the United States could not.
The European Union is facing a potentially huge hurdle: banks may not want to have a connection with the payment entity.
Banks that do business with it may be subject to US sanctions. And if Western banks do not connect to the entity, European companies will have no way to get money into or out of the payment mechanism.
The European Union could try to appeal to a government-owned institution, such as its loan arm, the European Investment Bank, to process incoming and outgoing payments from the entity. But this institution would most likely be vulnerable to US sanctions.
Even if the European Union could put the system in place, it should convince companies of the reliability of its system and its security, so that the United States government can not penetrate it.
Rivka Little, research director specializing in payments at International Data Corporation, a consulting firm, said that creating a payment company would be a gigantic undertaking. The EU entity may be easier to establish because of its narrower scope, but, she said, customers still expect it to have all the necessary features, such as as messaging, clearing and settlement.
And at a time when there was evidence that payment networks were vulnerable to abuse, the European Union should monitor it to detect illegal activity.
"There is one thing that fraudsters love most of all, and it's a new payment network," Ms. Little said.
Despite all these challenges, the European Union's payment channel could attract enough participants to maintain it.
The big question is whether big Chinese and Russian companies would use the entity for activities targeted by the United States, such as trade in oil and gas products.
"This is a very important sign that Russia and China are in this situation," said analyst Kirkegaard.
China already has a lot of experience in Iran trade under the US sanctions and seems to have set up a payment channel. According to a prominent Iranian businessman quoted in a 2016 New York Times article, Chinese bank Kunlun helped make payments in Iran and abroad. (It's also a target of US sanctions.)
The European Union may, however, decide that involving Chinese or Russian companies could seriously affect its relations with the United States.
But even if it excludes such companies, the block could still find companies eager for alternative money transfer solutions. Some small European companies, for example, may carry on activities in Iran that are not subject to US sanctions, such as the export of certain consumer goods, and would find that the entity offers easier access .
The danger for the United States is that the payment mechanism gives the European Union valuable experience outside of Washington's financial sphere of influence and becomes a permanent part of the international payment system.
This week's Treasury Department e-mail has shown concern for the United States and the Trump administration may soon have to decide to respond. Erich Ferrari, a lawyer specializing in US sanctions law, said that the Trump administration could directly impose sanctions on the entity or put pressure on private companies for them to do it. do not use.
"It will be a showdown," Ferrari said. "Where does the United States want to push that?"
