June 6, 2018 / 5:14 PM / 13 days ago

U.S. officials on roadshow to cut Iran investment, trade - sources

PARIS/WASHINGTON/BRUSSELS (Reuters) - U.S. officials are touring the globe to pressure countries to shun trade with Iran following Washington’s withdrawal from a nuclear deal between Tehran and world powers, a move that undermines European efforts to save the accord, sources said.

FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi//File Photo

U.S. State and Treasury Department officials have travelled to Japan and this week U.S. diplomats are in eastern Europe as Britain, France and Germany scramble to save the 2015 pact and convince Iran that they can continue to do business with Tehran.

“The Americans are on a roadshow and going everywhere. They are dogmatic,” said a senior European diplomat. “We were clear and told them: if you are coming to tell to us how to apply American laws here then you’re not welcome,” the diplomat said.

Ministers from the three European nations and the EU foreign policy chief have written to U.S. counterparts urging them to protect EU companies working in Iran from getting caught up in Washington’s new sanctions on the Islamic Republic.

In the June 4 letter, the foreign and finance ministers singled out areas where they expected exemptions for EU firms, including pharmaceuticals, healthcare, energy, automotive, civil aviation, infrastructure and banking.

The letter appeared to accept that despite their efforts to circumvent secondary sanctions, the U.S. action could prevent the EU from continuing “meaningful sanctions relief to Iran.”

The U.S. roadshow suggests there is little appetite in Washington to compromise.

“We will hold those doing prohibited business in Iran to account,” U.S. Under Secretary of the Treasury Sigal Mandelker said in a blunt speech on Tuesday.

A second EU official said the U.S. was sending out such teams across the world with a private warning against doing business with Iran.

Washington last month said it would impose new economic penalties after pulling out of the accord that world powers struck with Iran under which Tehran agreed to curb its nuclear activities in return for sanctions relief.

One EU official said the United States had also pressed the European Investment Bank, which has never done business in Iran, not to invest in European firms doing business there, despite a European Commission proposal it start doing so.

GLOBAL REACH

The European powers are trying to come up with a package to ring-fence trade with Iran against renewed U.S. financial sanctions to dissuade Tehran from quitting the accord.

But the global reach of the U.S. financial system, forcing companies to choose between two irreconcilable options - selling to Iran or to the vast U.S. market - is driving home the limits of European efforts to shield their revived trade with Tehran.

According to two diplomats, Andrew Peek, deputy assistant secretary of state with responsibility for Iran and Iraq, was in the Czech Republic on Tuesday and Hungary on Wednesday.

“The State Department delegation to Europe seeks to garner support for our global effort to pressure Iran and to explain our sanctions policy,” an U.S. State Department official said.

“We are making stops to many countries and will expand our diplomatic outreach efforts worldwide in the coming weeks. Meanwhile, our engagement with the E3 (Britain, France, Germany) is on-going, including during this worldwide diplomatic engagement.”

Peek briefed senior EU diplomats in Washington in May and warned the bloc to cut investments in Iran, telling EU officials doing business with Tehran helped fund its missile programme and support for proxies in Yemen and Syria, diplomats said.

One diplomat said the focus on Eastern European nations might be designed to pressure those EU countries most dependent on U.S. security assistance in the face of a resurgent Russia.

However, another diplomat suggested the push could backfire.

“This escalation and strategy of confrontation is a serious mistake and risks provoking even more chaos and instability in the Middle East,” said a diplomat aware of the roadshow, saying U.S. efforts had begun to “irritate quite a few of its allies.”

Additional reporting by Marton Dunai in Budapest, Writing by John Irish, Editing by William Maclean

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