Iranian success in European courtrooms. Feb 24, 2014, Vol. 19, No. 23 • By ANDREW SOUTHAM and TED R. BROMUND
In a recently leaked private phone call, an EU foreign policy official, Helga Schmid, grumbled to the EU’s ambassador to Kiev that it was “very annoying” that the United States had criticized the EU for being “too soft” to impose sanctions on Ukraine. Criticism may be annoying, but EU softness is a fact of life, and the transatlantic trouble over sanctions goes beyond Ukraine. For the past year, British and European Union sanctions against Iran have faced a string of legal challenges and lost nearly every round. The sanctions relief offered by the so-called interim nuclear deal between the P5+1 and Iran conceals the broader problem that the European legal basis for sanctions is eroding. Iran is expert in the waging of terror wars. It’s also, it turns out, good at lawfare.
The West prides itself on its legal system and its protection of property rights. Lawfare seeks to turn these strengths into weaknesses by abusing law to achieve warlike ends. Iran’s legal battles in Europe are a study in lawfare’s increasing power to tie democracies into self-imposed knots. And Iran has done more than befuddle the Europeans. It’s written a playbook for any future subject of sanctions: When Europe calls, lawyer up.
The EU has imposed broad sanctions against Iran since 2007, and in 2009 the British Treasury extended its own sanctions to include Bank Mellat, 20 percent owned by the Iranian government. The bank appealed and in 2013 won a judgment in the U.K. Supreme Court, which found the measures were “arbitrary and irrational” and “disproportionate.” Later that year, the European General Court, for similar reasons, ruled against EU asset freezes of seven firms connected with Iran.
The defeats keep on coming: Last month, the General Court removed Iran’s North Drilling Company from the list of sanctioned firms. It’s merely icing on the cake that Britain may be held legally responsible for the damages Bank Mellat incurred as a result of the sanctions.
The Iranians have reacted to these victories with a mixture of self-righteous indignation and barely suppressed glee. As a strategy, lawfare is particularly galling because it holds that terrorists and dictators are virtuous defenders of law, in contrast with supposedly rogue Western nations. Iran’s Fars News Agency happily reported the claim of a managing director of an Iranian bank that the EU’s actions were “illegal,” while Iranian deputy oil minister Ali Majedi called on French energy firms to invest in Iran and show “the independency of [the] economic sector from politics.”
The Iranians are not the only ones pitching the French. In a recent interview, Secretary of State John Kerry stated that “while the French may send some businesspeople over there, they’re not able to contravene the sanctions. They will be sanctioned if they do and they know it.” So, he sternly concluded, the French had been put “on notice.” When John Kerry scolds France, the world has stopped making sense. Perhaps if Paris fails to heed his notice, he’ll send a letter. He’d have to copy it widely: In mid-January, the Dutch ambassador to Iran held a speed-dating session with firms panting to join the Iranian action. The Wall Street Journal writes mordantly of the coming “gold rush” to Iran.
That characterizes the situation a bit too strongly. The challenge to EU sanctions will take time to unfold. Late last year, the EU started to warn companies that had won favorable rulings that they would be targeted with new sanctions. The EU has an ignoble tradition of using this try, try again approach—in national referenda, they only stop asking when they get the answer they want—but here their bureaucratic persistence serves a noble end. Warnings may not work, however: The Journal reports European officials are concerned that further legal defeats could destroy sanctions altogether.
The fall-back option is to rely on U.S. sanctions and the willingness of the United States to punish foreign firms that evade them. On February 6, Treasury penalized 18 businesses and 14 individuals in eight nations. The U.S. sanctions regime is legally more robust than Europe’s, which implicitly presumes that firms have a right of market access and any exclusion must be regularly justified. But it is one thing for the United States to punish a motley collection of mostly Middle Eastern firms. It would be politically quite another for the U.S. government to designate major European companies if EU sanctions collapse any further. Even a White House that badly wanted to ramp up the pressure on Iran might be reluctant to go after leading European banks, and this White House badly wants no such thing.
7:24 AM, Dec 13, 2013 • By STEPHEN SCHWARTZ
On November 26, the Financial Times published an extravagant encomium to Lady Catherine Ashton by its Brussels bureau chief Peter Spiegel, under the headline “EU foreign policy chief Lady Ashton comes of age in Iran talks.” Spiegel reported, “her team returned from negotiations in Geneva to a standing ovation . . . from EU ambassadors for their part in clinching a historic deal to limit Iran’s nuclear ambitions.”
9:04 AM, Jul 17, 2013 • By ELLIOTT ABRAMS
This week the EU took a stance that it heralded as pro-peace, pro-"peace process," and anti-settlement. Henceforth, new guidelines require all 28 member nations to refuse any grants, scholarships, prizes, or funding to entities in Jewish settlements in the West Bank. Or any part of Jerusalem that was not part of Israel prior to the 1967 war. Or the Golan Heights.
12:00 AM, Jul 13, 2013 • By IRWIN M. STELZER
Here’s a TTIP for you. No, that’s not a typo missed by our ever-vigilant editors. It stands for Transatlantic Trade and Investment Partnership, what British prime minister David Cameron calls a “once-in-a-generation prize” that can create two million jobs on both sides of the Atlantic, and Sir Peter Westmacott, Britain’s ambassador here in Washington, reportedly describes as the “Holy Grail” for resuscitating transatlantic economies.
The European Union’s coming attack on the Anglo-Saxon financial sector Jul 1, 2013, Vol. 18, No. 40 • By ANDREW STUTTAFORD
Take a visit to the cyber-belly of the beast, to a website run by the European Commission, the EU’s bureaucratic core, and you will be told that “the financial sector was a major cause of the [economic] crisis and received substantial government support.” Soon it will be payback time, in the form of Europe’s new Financial Transaction Tax (FTT), set to be levied at a rate of 0.1 percent on equity and debt transactions, and 0.01 percent on trades in derivatives. It will ensure that the financial sector “makes a fair and substantial contribution to public finances.”
3:05 PM, Mar 18, 2013 • By DANIEL HALPER
The Russian energy company Gazprom is offering to bailout Cyprus in exchange for gas exploration rights, according to media reports.
"Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’ exclusive economic zone, local media reported," reports GreeceReporter.com.
12:31 PM, Mar 17, 2013 • By GEOFFREY NORMAN
Recall how improbable it seemed that the tiny nation of Greece might bring down the Euro and cripple the world's financial mechanisms? And, then, the story – if not the danger – seemed to fade away. Well, it now appears that the even more insignificant island of Cyprus may provide the spark. As Liz Alderman reports in the New York Times:
12:00 AM, Feb 9, 2013 • By IRWIN M. STELZER
Growth is the summum bonum of economic policy. Tough to arrange at home: stimulus packages don’t work very well, and monetary policy produces lots of fiat money but not very many jobs. The solution: export-led growth—the other guy will buy so much of your goods and services that your economy will grow. There are two ways to make this sort of growth happen. Lower the international value of your currency so that your output is cheaper overseas, or increase productivity at home by lowering labor and other costs and therefore the prices you need to charge foreigners.
1:29 PM, Feb 6, 2013 • By LEE SMITH
Yesterday the Bulgarian government announced the results of its investigation into the July 18, 2012 bus bombing that killed 5 Israeli tourists and a Bulgarian bus driver in the city of Burgas. At least two members of what appears to have been a three-man team belong to Hezbollah. More specifically, explained Bulgaria’s interior minister, Tsvetan Tsvetanov, they were part of Hezbollah’s “military wing”—a peculiar turn of phrase that hints at the political implications of the Bulgarian investigation, which may have a major impact on European Union foreign policy as well as Hezbollah’s ability to operate on the continent. And yet the most serious repercussions may be felt inside Lebanon, where Hezbollah is already feeling the pressure.
7:32 AM, Jan 18, 2013 • By STEPHEN SCHWARTZ
Bosnia-Herzegovina has seen the last of hundreds of employees of the European Union, United Nations, and other international agencies, including dozens of non-governmental organizations (NGOs) that once gathered there. They have left the country a politically-partitioned and economically-distressed state that, if not failed, seems ever deteriorating.
Leader of the Finns party, Timo Soini, at a polling station in Espoo last JanuaryDec 24, 2012, Vol. 18, No. 15 • By ANDREW STUTTAFORD
He won more votes than any other candidate in Finland’s 2011 parliamentary election, and the maverick party he leads is a profound embarrassment to the current eurozone regime, but there’s something refreshingly down-to-earth about Timo Soini, the leader of the euroskeptic Perussuomalaiset (PS), or, perhaps more easily for you and me, the Finns party.