The French state-owned bank Bpifrance has pulled out of plans to create a mechanism to aid French businesses that would trade with Iran, in light on US sanctions against the Gulf nation.

Earlier this year, the bank said that it was working on a project to finance French companies that wanted to export goods to Iran, despite US sanctions that had been announced by Donald Trump. Bpifrance thought it would be possible to structure the financing outside of the US financial system, thus avoiding the extraterritorial reach of US legislation and secondary sanctions.

Nicolas Dufourcq, Bpifrance’s chief executive, said: “It’s put on hold. Conditions are not met… Sanctions are punitive for companies.”

The bank wanted to create a euro-denominated export guarantee – they had to use the Euro because Iran was banned from using the US dollar in August – for French goods and services to allow Iranian buyers to feel secure in their purchases.

Dufourcq’s comments show that the US sanctions are making trade between Iran and Europe difficult, even though the EU is still actively supporting these links.

Bpifrance is just the latest in a long line of European companies to pull out of Iran citing US sanctions. Earlier this month, Swedish truck maker Volvo announced that it has stopped assembling trucks in Iran, citing that they could no longer get paid for the parts that they shipped.

Volvo spokesman Fredrik Ivarsson said: “With all these sanctions and everything that the United States put… the bank system doesn’t work in Iran. We can’t get paid… So for now we don’t have any business (in Iran).”

Other companies that have withdrawn from Iran in recent months, include oil company Total, Air France-KLM and British Airways.

The sanctions are coming into effect after Trump pulled the US out of the 2015 nuclear deal between Tehran and six world powers back in May. As mentioned, some sanctions, including bans on Iran using the US dollar, went into effect in August and more targeting Iran’s oil industry and central bank will come into effect on November 4.

Some European diplomats and politicians have said that this could spark a change in Europe’s dependency on the US financial system, while some EU laws to penalise companies that pull out of Iran were announced, but the truth is that the US financial system is dominant and European companies would rather face fines at home than be cut off from the US.

Source » ncr-iran