The head of the European Investment Bank has thrown into doubt whether the European Union can deliver on its pledge to save the Iranian nuclear deal, saying the bank cannot invest in Iran as the EU has envisioned.
Bank President Werner Hoyer said on July 18 that while he supports EU efforts to keep the 2015 deal alive after the U.S. decision to withdraw from it, Iran is a place "where we cannot play an active role."
"There is no European bank which is presently able to do business in and with Iran," Hoyer told reporters in Brussels. "We have to take note of the fact that we would risk the business model of the bank if we were active in Iran."
The bank's lending to Iran had been a central plank of the EU's plan to keep investment money flowing into Iran while the United States is cutting off Tehran's access to the U.S. financial system as it reimposes sanctions in coming months.
But Hoyer said the not-for-profit lender fears any dealings with Iran would jeopardize its ability to raise money on U.S. markets, and if it were cut off by the United States, that would have far-reaching consequences for the bank's operations.
Hoyer pointed out that the bank has outstanding bond issues totaling 500 billion euros ($581 billion) that must be continuously rolled over and refinanced in global markets.
Iran has called on European powers to guarantee that its economy continues to benefit from the nuclear agreement and has warned that it may walk away from the deal if it fails to keep experiencing those benefits.
Although official watchdogs say that Iran has continued to comply with the deal despite the U.S. withdrawal, on July 18 Iran appeared to take a step toward the door by announcing it is continuing to acquire uranium and is close to finishing a plant where it can build more centrifuges to enrich uranium.
The nuclear deal requires Iran to limit its uranium-enrichment activities in exchange for relief from global sanctions.
The other signatories to the deal -- the European Union, China, and Russia -- have been working to salvage the accord to prevent Tehran from developing a nuclear weapon.
Lending from the European Investment Bank was a key provision of the EU's plan to compensate Tehran for the cutback in business it is experiencing as a result of looming U.S. sanctions.
Other provisions of the EU plan include a measure to shield EU companies from U.S. secondary sanctions, state-backed export guarantees for Iran, and a plan for EU governments to make direct money transfers to Iran's central bank.
But few businesses have taken advantage of euro-denominated financing set up by European countries to facilitate trade with Iran.
Italy's new state-owned entity to guarantee credits to companies in Iran, Invitalia, has a scheme in place but no firms have made use of it.
In Britain, the situation is similar. Accounts show that no sterling or euro credits have been provided to British companies exporting to Iran in the 2017-18 financial year.
EU officials hope their so-called blocking statute, which takes effect next month, will shield small- and medium-sized businesses working in Iran. The statute bars any EU company from complying with U.S. sanctions and does not recognize any court rulings that enforce U.S. penalties.
But major companies such as French oil giant Total and carmaker PSA Group have already announced that they are winding down operations in Iran unless they get explicit exemptions from the U.S. sanctions.
"PSA made its decision with regard to the new U.S. sanctions, in order to be in conformity with American regulations," a company spokesman said on July 18.
In another blow to EU efforts, U.S. Secretary of State Mike Pompeo wrote to EU foreign policy chief Federica Mogherini this month, rejecting a request for blanket waivers from the sanctions for European companies.
But Mogherini said on July 18 that she was still optimistic.
"The set of measures we have been putting in place...allow us to guarantee that Iran continues to benefit from the economic benefits coming from the implementation of the agreement," she said.