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US puts squeeze on European firms doing business with Iran

Berlin

TO BE a European company with links to Iran in the age of American sanctions can mean dealing with challenges that, every day, verge on the existential.

Suppliers cut off their shipments with little warning. Phone lines get disconnected. Even having the elevators repaired can be an ordeal, with service contracts cancelled.

It is all related to the Trump administration's extraordinary campaign to not only choke off American trade with Iran but European commerce as well.

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Since President Donald Trump announced in May that he was pulling the United States out of the Iran nuclear deal, European governments have sought to keep the agreement on track by keeping their companies engaged in Iranian trade.

Europe last week unveiled its most dramatic step to date, with the creation of a trading system that could ultimately be used to allow firms to skirt US restrictions.

But the European effort remains mild compared to the zeal with which the US has been pressing the continent's firms to get out, say industry associations, government officials, analysts and representatives of companies that have been targeted.

In the struggle to determine whether the nuclear deal lives or dies, the US has been willing to cross boundaries that Europe has, thus far, been reluctant to push. That has not been lost on the authorities in Iran, where pressure is growing to abandon the deal in the face of American attempts to undermine it.

"There is more passion from our American friends to create problems," said Michael Tockuss, general secretary of the German-Iranian Chamber of Commerce.

Those problems, Mr Tockuss added, stem from direct pressure being applied by US officials on European firms, as well as the ripple effects as word spreads of the lengths to which American authorities will go to force companies to rethink their plans.

"It's intimidation," he said. "They live on the fear."

Mr Tockuss, whose organisation represents German firms that do a significant share of their business in Iran, said he knew of at least 20 members that had been personally visited by US officials and urged to slow their operations in Iran.

Some companies, he said, were offered a friendly pitch about their importance to the US-German trade relationship. Others were threatened with economic consequences if they failed to comply.

He described the contact as inappropriate."I don't consider it the job of any diplomat to threaten a company," he said. "They should not be treating companies in their host country this way."

But at the US Embassy in Berlin - locus of an effort that spans the continent but is especially intense in Germany, Europe's economic powerhouse - it is proudly described as the "maximum economic pressure campaign". Secondary sanctions, as the US efforts to constrain European firms are known, are not unusual. But it is unconventional for the US to enforce them so vigorously on the home turf of its closest allies.

Richard Grenell, US ambassador to Germany and a close Trump ally, began his tenure in May with a tweet urging that "German companies doing business in Iran should wind down operations immediately".

The comment earned him stinging criticism from German officials and commentators, who accused him of overreach. But Mr Grenell has kept up his campaign, publicising meetings with German companies to discuss Iran and celebrating each corporate departure with the hashtag #sanctionsareworking.

There have been many such announcements: manufacturer Siemens, financial services company Allianz, and automakers Volkswagen and Daimler are among the German megafirms that have said they are getting out.

But many other firms - especially those that have a special focus on Iran or that don't do significant business with the US - have stayed. It is with some of those companies that the US tactics appear to have been especially aggressive.

In the autumn, the Hamburg branch of the Iranian-owned Bank Melli, which is based in Germany, discovered how tough the US can get when it received a letter from German communications giant Deutsche Telekom declaring that all phone and services would be cancelled.

Deutsche Telekom told the bank that it would no longer be able to pay its bills because sanctions had disrupted financial links with Iran.

But Bank Melli's lawyer, Thomas Wülfing, said he believes that was just a pretext for Deutsche Telekom, a firm with significant US financial interests due to its American subsidiary, T-Mobile. "It's very clear that there must have been pressure from the Americans," he noted. "There's no other explanation for it. They wouldn't do this if they didn't have to. Especially since they have been contractual partners with our clients for a long time without any problems."

In Bank Melli's case, Mr Wülfing was able to obtain an immediate court injunction that blocked Deutsche Telekom's attempt to cancel services. But he said that other Iranian-owned clients with operations in Europe have been without phone or Internet services for a week or more. He said his clients have also had service and leasing contracts unexpectedly cancelled.

German government officials have, at least in public, been restrained in their responses to US tactics, opting not to further strain an alliance that is already badly tattered.

They also have been guarded in their assessments of whether the Iran deal can be saved. WP