The European Union has also used economic sanctions to further its political goals. The success of EU sanctions depends on the economic strength, financial potential and technology of the EU. In addition, due to the common political interests between the EU and the United States, EU sanctions policies are largely aligned with US sanctions policies. However, there are some fundamental differences between US and EU sanctions approaches.
Differences between EU and US Sanctions Approaches
The first difference between the EU and the US is the level of commitment to multilateral diplomacy. The United States often imposes its sanctions on the international community without regard for other countries; But the EU’s approach has been more based on building alliances between neighboring countries, common interests and other countries with their own sanctions in order to involve a wider range of countries in the implementation of sanctions by creating a multilateral alliance. Because the stronger the coalition, the more powerful it is to put pressure on the target country. The multilateral use of sanctions is considered an important normative issue for the European Union, and the roots of its extensive cooperation with the United States can be traced to this.
Another difference between the EU and the US in the use of economic sanctions instruments is the EU’s cautious approach to external sanctions, or so-called secondary sanctions. The United States has made extensive use of secondary sanctions to extend its sanctions beyond its sovereign borders to defeat target countries. On the other hand, although the European Union may have the economic power to impose external sanctions, it does apply the sanctions imposed within its jurisdiction; In other words, unlike the United States, which considers its sphere of sanctions to be cross-border, the European Union imposes its sanctions within its borders.
Economic sanctions In addition to harming the target country economically, they also harm the countries that impose and comply with the sanctions. On the other hand, economic sanctions are effective and beneficial if the damage done to the target country is more than the damage done to the country imposing or following the sanctions and the least damage is to the mentioned countries. Now, according to the existing descriptions, the main question is whether the European Union has always been the winner of support for US sanctions or the imposition of US-related sanctions against Iran and other countries or not?
To get an answer to this question depends on recognizing the conflicts and contradictions between the positions of EU leaders and economic actors, European governments and the US government.
European Paradox in Trade Sanctions
The first sanctions paradox in the European Union is the conflict between the political interests of member states and the economic interests of European companies. Secondary US and EU sanctions have barred European economic actors from operating and investing in the lucrative markets of Iran, Russia and other sanctioned countries. For example, after the signing of the Joint Comprehensive Plan of Action (also known as Iran Nuclear Agreement) and the suspension of some sanctions against Iran, European companies flocked to Iran to secure their economic benefits for investment. Total and Shell companies in the oil and energy sector, Airbus and ATR in the aviation industry, Save company in launching industrial plants, Daimler, Renault and Peugeot Citroen in the automotive sector, Orange in the telecommunication and communication technology sector, Alstom in the locomotive and railway sector, and SAGEM in the field of port terminals and maritime services voiced interest in cooperation with Iran and many of them signed agreements with Iran.
Following the withdrawal of the United States from the JCPOA and the re-imposition of sanctions due to the European Union’s failure to take a serious stance against the United States, these companies left Iran and refused to continue cooperation; In other words, US sanctions over the European Union’s lack of support for European companies deprived them of the very good and profitable investment opportunities that existed for European companies in Iran, and Iran was not the only country to suffer as a result of the sanctions. On the other hand, the trade opportunities between Iran and Europe have been so tempting that some European individuals and companies wanted to violate and bypass the sanctions. Of course, this is not unique to Iran, and it is true of other sanctions as well. That is why most of the penalties for violating US sanctions have been paid by Europeans.
The Russian Council on Foreign Relations (RIAC) released a report in 2019 stating that out of 201 US Treasury Department penalties, 40 have been imposed on EU companies and 133 on US companies over the past decade. Although the number of penalties imposed on European companies is lower, they have paid the highest amount of penalty. In those 10 years, the US Treasury has collected a total of $5.6 billion in penalty. Of that amount, Europeans paid more than $4.6 billion, or 83 percent of the penalty, while Americans accounted for $177.2 million, or 3 percent of the penalty. This distribution of US sanctions penalty, in which the minority of fined companies in Europe pay the highest amounts of penalty and incur the highest costs of sanctions, has been called the European sanctions paradox by some thinkers.
European Paradox in Energy Sanctions
In addition to what was said in the previous debate regarding the embargo on European companies operating in the energy market and investing in Iran’s oil and gas industry, it should be noted that such sanctions have also affected the European energy market. Today, energy security is one of the main challenges facing the European Union. The EU’s growing need to import energy, including natural gas, to inject into its industrial arteries and economy has made it more sensitive to the prospects for energy supply and transmission. This has made EU members vulnerable to supplier countries’ energy policies and EU sees energy security as a serious challenge.
Russia and Iran, on the other hand, have the largest natural gas reserves in the world, and the European Union imports most of its energy from Russia. Rising political tensions, as well as Russia’s geopolitical approach to the use of energy as a means of regaining international power, have prompted the European Union to diversify its energy sources and transmission lines. Political tensions between the EU and Iran, as well as the EU’s support for US hostile stances against Tehran have prevented the EU from recognizing Iran as a source of energy supply, and this has affected the energy security of the European Union and made it vulnerable to Russian policies.
The French Institute for International Relations (IFRI) examines this issue in detail in a report entitled “Sanctions and the End of Atlanticism” published in January 2020. This report examines the negative effects of EU compliance with secondary US sanctions against Iran and Russia on EU energy security. In this report, citing the low volume of trade between Russia and the United States as well as Iran and the United States, and in contrast to the high volume of trade between Russia and Europe as well as Iran and Europe, the European Union has been identified as the main loser of secondary US sanctions against Iran and Russia. The report concludes that the EU is in an energy paradox between political support for US secondary sanctions and attention to economic interests and energy trade with Iran and Russia to ensure its energy security. Ultimately, in the future that the report outlines, the EU is expected to face a clear contradiction between energy security and its international policies, and will eventually be forced to reconsider the implementation of US secondary sanctions.
Political Paradox in EU
Secondary US sanctions are a violation of the principle of equality of sovereignty in international law. The simple meaning of the principle of equality of sovereignty is that all states have equal sovereignty, and this right must be respected by states. The legal basis for the principle of equality of sovereignty can be found in the 1945 Charter of the United Nations, the Declaration of the UN General Assembly in 1970, the Declaration of Principles of the Helsinki Final Act of 1975, the Final Document of the 1998 Conference of the Parties to the OSCE, and the 1990 Charter of Paris for a New Europe.
But by imposing secondary and cross-border sanctions, the United States has expanded the scope of its sanctions to other parts of the world, forcing individuals and companies in all countries to comply with their sanctions laws by violating the principle of equality of sovereignty and the rule of law. The European Union is no exception. In the face of US sanctions, the European Union is facing a political paradox between its political relationship with the United States and violation of its own sovereignty.
It has already been stated that in many cases the European Union has adopted a policy of alignment with the United States; but this does not mean that it is completely in line with the United States in all policies. That is why the European Union passed a Blocking Statute in 1996 to nullify US sanctions against Cuba and several other countries.
The Blocking Statute was generally designed to prevent European economic actors from complying with extraterritorial sanctions on other countries, such as the United States. The end result of this law is the imposition of penalty by European governments on European individuals and companies that violate US sanctions. Although the law does not apply to all sanctions in practice and does not work well and in cases where it does, it illustrates the political paradox in the European Union between surrendering to US extravagance and maintaining its sovereignty. On the other hand, the law leaves European economic actors in a dilemma: paying penalty to the United States for violating the sanctions or imposing penalties on European governments for complying with US sanctions.
The bottom line is that the EU’s international policies in line with the United States in the three dimensions of trade, energy and political security are in clear conflict with the politico-economic interests of its nations, and the EU incurs costs and losses even more than the United States as a result of the US sanctions and the adoption of policies in line with it. In the future, the European Union will have to choose between the interests of its nations and support for US foreign policy, because according to historical experience, there is no possibility of consensus between the two.