UK’s Failed Withdrawal Treaty – Attempts to Undermine US Sanctions Policy

the EU Bank

The real truths of former PM May and former Chancellor Hammond’s failed Withdrawal Treaty emerging – over the incomprehensible approach to the European Investment Bank included in the Withdrawal Treaty, which was rejected three times by the UK Parliament.

Former Chancellor Hammond, it should be noted, was on the Board of Governors of the EIB and former signatory, as then-UK Foreign Secretary, to the 2015 Iran Nuclear Deal.

It was known that former PM May and Hammond were willing to hand over the UK’s 16.1% stake in the European Investment Bank for nothing. The UK has never received a single dividend by the EIB despite having a 16.1% stake and has only benefited from 8.1% of the loan portfolio. The failed Withdrawal Treaty would also have made the UK taxpayer liable for any Eurozone failings for the next 12 years.

It has now been established1 that plans were also afoot to try to ensure that EIB staffers were not liable for US Sanctions breaches over the EU’s desire to fund Iran, which the EU itself has sanctioned over security issues, despite the EU still being part of the failed JCPOA – or Iran Nuclear Deal.

Such a move would have been disastrous for UK/US relations, as Iran is fully designated under US Sanctions, amongst other things as a “State sponsor of terror”. US Sanctions policy on Iran has been largely unchanged since the time of President Carter, as rightly pointed out by Norman Roule, former CIA and ODNI policy expert and National Intelligence Manager for Iran in Washington Institute’s excellent 27 Sept 2019 webcast2.

This is despite spurious claims to the contrary in the media that the Trump Administration is any different from, say, Obama, whose Iran Nuclear Deal was passed despite Iran remaining under the wide, integrated US Sanctions & AML regime for all practicable non-nuclear (i.e. commercial) purposes.

The attempt by former UK PM May and former Chancellor Hammond (importantly, Hammond was signatory to the Iran Nuclear Deal as then-UK Foreign Secretary) to allow the EIB to fund Iran under the now failed Withdrawal Treaty would have driven a wedge between the UK and its closest strategic ally, the US, and likely led to the US sanctioning EIB being sanctioned for funding Iran, a US-designated State sponsor of terror anyway, principal EIB actors included.

Which just goes to show how little Whitehall and Westminster understand about US Sanctions. As we have already seen, there is no credible defence to US Sanctions breaches, whether “guaranteed” in slavish, mis-guided government paperwork like the UK’s failed Withdrawal Treaty or not. The EU’s attempt at a Blocking Statute or INSTEX has yet to work to date, and scores of European firms have paid the price over 2008-2018 in the form of US Sanctions & AML fines and measures, for failing to appreciate the full scope of the integrated US Sanctions & AML regime.

Successive UK Governments have shown a very limited understanding the true scope and reach of US Sanctions policy, and it is to be hoped that this will change to avoid further rifts between the UK and its closest strategic ally, the US. The Boris Johnson-led UK Government seems to be more in tune with US Sanctions policy, but the threat of further fallout between the UK and the US is immense should the likes of Jeremy Corbyn and ultra-Left Labour find their way into 10 Downing Street. Not to mention other pro-EU political elements in the UK and elsewhere.

US observers – particularly those who favour a more pro-EU stance – should also be mindful of the fact that pro-EU supporters in the UK and Continental Europe have an anti-US bias in terms of foreign policy and, particularly, US Sanctions policy. This is particularly acute when it comes to the US stance on Iran, with so many vested Continental European commercial and trade interests there.

The combination of the EU’s formal rejection of US extra-territoriality and US hardening of its Sanctions stance on the like of Iran are bound to lead to policy conflicts in due course, with major negative impact inevitable for European commercial and trade interests as US Sanctions penalties bite if they fail to comply with the US integrated Sanctions & AML program.

1 R. Rowland, ‘Bunging the EU billions of pounds for free shows the toxic ineptitude at the heart of May’s Brexit deal’, Daily Telegraph (30 September 2019)