On July 27, 2010, the European Union’s (EU) Foreign Affairs Council adopted the toughest sanctions it has imposed on Iran to date. More stringent than the newly passed UN sanctions and more closely aligned with U.S. policies than before, the newest EU sanctions target the energy sector and involve asset freezes, travel bans, and trade restrictions, among other things. Because the EU is Iran’s largest trading partner, the new sanctions are expected to have a major economic impact on Iran. The sanctions will also have a significant impact on European companies (including U.S. subsidiaries), and some European business deals with Iran will no longer be legally compliant.
Among its key provisions, the EU sanctions impose an asset freeze on targeted banks, including Iran’s largest, Bank Melli. As a result, Bank Melli will be forced to cease operations in London, Hamburg and Paris. Additionally, certain Iranian officials, as well as organizations in the shipping and insurance industries identified as having connections with Iran’s nuclear and weapons programs, have been added to the EU’s visa ban and asset freeze lists. Among the newly targeted organizations is the Islamic Republic of Iran Shipping Lines (IRISL). Both Bank Melli and IRISL have long been targets of U.S. sanctions.
Another key aspect of the EU sanctions is a newly imposed ban on the sale or transfer of equipment, technology or services which benefit Iran’s energy sector. Similar restrictions were imposed under the newly enhanced U.S. sanctions which came into effect within the last month.
Many European companies – including Siemens AG, Daimler AG, Allianz SE, Munich Re AG, and Deutsche Bank AG – have already voluntarily abandoned trade with Iran. This trend is likely to spread as the international momentum for multilateral sanctions grows. These new sanctions have dramatic legal consequences for many multinational companies and will require equally dramatic changes to business practices.
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