US and EU Sanctions – Cases of Zimbabwe and Iran

Posted on March 26, 2013 by Farhad Alavi — Leave a comment

Al Jazeera yesterday carried a report that the European Union intends to lift sanctions on certain individuals affiliated with the Zimbabwean government. This, along with recent news regarding Iranian banks winning lawsuits in the EU General Court over their allegedly wrongful designation on the EU sanctions lists prompted me to ponder the efficacy of US sanctions versus the potentially more nimble EU ones.

Indeed, Europe has long been more reluctant to resort to sanctions as a foreign policy tool. However, in recent years we have arguably seen more action by the Europeans on the sanctions front. This is possibly most visible in the case of Iran. Although EU sanctions on Iran are in many ways much lighter than those imposed by the United States, they are still very stringent, particularly considering Europe’s longstanding trade ties with Iran. With Zimbabwe, like the US, the EU has also singled out individuals and has placed various bans on their activities in the EU (as the US similarly does internally).

The US State Department has reportedly stated this week that it is “concerned” by the decisions by the EU General Court to lift designations on Iran’s Bank Mellat and Bank Saderat. Efforts are being made to undermine this decision. This reminded me of discussions I’ve had with certain circles where the common refrain is that even if President Obama wanted to lift the sanctions on Iran (say if Iran was to reduce its uranium enrichment), he would have a hard time doing so due to all the necessary legislative obstacles. It took years to repeal the sanctions against Iraq, and based on a simple glance at the conference schedule at OFAC’s Financial Symposia last week, Iran stands front and center of the agency’s sanctions regime.

Furthermore, the more the EU decides to cut back on its sanctions regimes, the more likely we will see exposure points in the US increase. If the Europeans once again are allowed to deal with entities also subject to US sanctions, there may be more probability that US businesses can be affected – be it subsidiaries abroad or relationship partners.