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EU sets in motion special mechanism against US sanctions

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According to French Foreign Minister Jean-Yves Le Drian, the EU’s updated Blocking Statute mechanism of maintaining financial, economic and trade relations with Iran, aimed at mitigating the impact of Washington’s sanctions on EU companies doing business with Tehran, will take effect within the next few days.

However, the French minister stood corrected by Reuters, which said that the EU mechanism would only be launched the next few days and could take several months to start working in earnest as many details still remain to be agreed.

The Special Purpose Vehicle (SPV) is part of EU efforts to protect and keep in place the Joint Comprehensive Plan of Action (JCPOA), commonly known as the nuclear deal with Iran.

On July 14, 2015, Iran and six countries (Russia, China, Britain, France, Germany and the United States, with the active participation of the EU) adopted the JCPOA as a way of resolving the Iranian nuclear problem, which had been a source of concern for the international community, above all the IAEA. This truly historic document brought Iran’s nuclear program in line with IAEA requirements and significantly reduced Tehran’s ability to build nuclear weapons.

Resolution 2231, unanimously approved by the UN Security Council on July 20, gave the JCPOA the status of international law.

The JCPOA and the UN Security Council resolution envisaged a reduction in Iran’s nuclear potential and a slowdown in its development rates within the next 10 to 15 years. It also provided for a gradual lifting of the financial and economic sanctions imposed on Iran over its nuclear program, thus setting in motion a process of peaceful and civilized implementation of the nuclear nonproliferation regime.

However, the new US President Donald Trump started lashing out against the JCPOA in 2016, while still on the campaign trail. As a result, in 2018 he withdrew the US from the compromise nuclear deal and slapped tough unilateral sanctions on the Islamic Republic.  What is more, “secondary” US sanctions targeted also foreign companies that would dare to keep doing business with Iran.

Iran, meanwhile, had given no reason whatsoever to doubt its meticulous implementation of the terms of the JCPOA accord. Since January 2016, the IAEA has verified Iran’s compliance with the JCPOA 13 times, with the UN nuclear watchdog’s Secretary General repeatedly confirming Tehran’s compliance with the agreement. Moreover, since the US withdrawal from the JCPOA, Iran has been intensifying its cooperation with the IAEA in a clear bid not to give Washington any pretext to blame it all down on Tehran, which has allowed no technical violations of the JCPOA and has consistently implemented its provisions.

All the signatories to the 2015 nuclear accord with Iran, including the European Union (and excluding the US), protested Washington’s decision to exit the JCPOA and have been working hard to keep it in place, even without the US.

As part of this effort, Iran was persuaded to continue to abide by the terms of the nuclear pact, even despite US sanctions, as it wants to avoid confrontation and maintain normal economic relations with the EU and other countries, and is not yet ready to exit the 2015 nuclear accord.

In August 2018, the EU reactivated the “blocking statute” that prohibits European companies from complying with US sanctions on Iran and implementing any decisions by foreign courts based on these sanctions thus nullifying their effect. The “blocking statute” also allows all European organizations to take legal action to recover damages arising from US extraterritorial sanctions from the persons who caused these damages to happen (meaning the US government).

This measure has proved less effective than expected though, since state authorities in countries with market economies cannot force private companies to challenge the global supremacy of the US dollar or dictate conditions in the global market, including the financial one, dominated by the United States. Therefore, it became clear that the situation necessitated the creation of a special mechanism for doing business with Iran bypassing  “primary” and “secondary” US sanctions with the help of an alternative payment channel to facilitate trade with Tehran – essentially a separate European SWIFT system with payments made in euros.

Much will depend on the effectiveness of this mechanism, to be shortly registered in France, and which is at the core of the EU’s efforts to keep the JCPOA in place. This means that the anti-American body will very likely be headquartered in France and headed by a German citizen with France, Germany and Britain acting as shareholders.

Even though the Special Purpose Vehicle (SPV), which offers sophisticated compensation services for exports to and imports from Iran, has not been devised with humanitarian activities in mind, EU officials still expect it to initially be used for food and medicine supplies until the system is firmly in place and working smoothly.

Meanwhile, Tehran believes that the SPV should go beyond covering only drugs and food, and also include a wide range of transactions, as well as economic and industrial cooperation, and even investments. Future will show whether this can be done though. According to some experts, the SPV is just a sort of a barter option without attracting direct cash payments, and will only serve small-scale transactions. French Foreign Minister Le Drian believes, however, that within the framework of the SPV Iran will be able to “benefit from some of its oil sources and at the same time buy essential products from the three main [European] partners,” (namely France, Germany and Britain).

The key question is how the US will respond. Will it be able to sidetrack this mechanism too?

Experts say, meanwhile, that the SPV is certainly not a magic wand but rather a complex, multi-layered financial and economic system. Moreover, its completely transparent market mechanism of maintaining business ties with Iran makes it vulnerable to potential attacks by Washington.

One encouraging factor here is that Switzerland, which is not an EU member, strongly believes that the JCPOA should remain in place and is now establishing its own interbank financial channel (independent of the EU) that would make it possible to bypass the SWIFT system in settlements with Iran and circumvent the US sanctions against Tehran.

Sharif Nezam-Mafi, Chairman of the Board of the Iran-Switzerland Chamber of Commerce, said that financial exchanges between the two countries will be carried out by the Swiss bank BSP, which prior to the introduction of anti-Iranian sanctions executed currency transfers from Iran to Switzerland.

Moreover, some of the proceeds from Iranian oil sales will be kept in this Swiss bank.

The launch of the SPV ushers in possibly the most crucial period in the ongoing political tug-of-war for preserving the JCPOA accord. If successful, it could help ease tensions in and around Iran and create a precedent in the future attempts to challenge the US financial domination and its aggressive policy of using economic sanctions against other countries.

If not, this could lead to Iran’s withdrawal from the JCPOA and the resumption of its nuclear program which, in turn, would further ratchet up tensions around the Islamic Republic.

Let us hope that the latter scenario never comes true.

First published in our partner International Affairs

Senior research assistant at RAS Institute of Oriental Studies, candidate of historical sciences

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Europe

Europe tells Biden “no way” to Cold War with China

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Amidst the first big transatlantic tensions for the Biden Administration, a new poll shows that the majority of Europeans see a new Cold War happening between the United States and China, but they don’t see themselves as a part of it.

Overwhelmingly, 62% of Europeans believe that the US is engaged in a new Cold War against China, a new poll just released by the European Council on Foreign Relations found. Just yesterday US President Joe Biden claimed before the UN General Assembly that there is no such thing and the US is not engaging in a new Cold War. So, Europeans see Biden’s bluff and call him on it.

The study was released on Wednesday by Mark Leonard and Ivan Krastev at the European Council on Foreign Relations and found that Europeans don’t see themselves as direct participants in the US-China Cold War. This viewpoint is most pronounced in Bulgaria, Hungary, Austria, Portugal and Italy, according to the study. The prevailing view, in each of the 12 surveyed EU member states, is one of irrelevance – with respondents in Hungary (91%), Bulgaria (80%), Portugal (79%), and Austria (78%) saying that their country is not in a conflict with Beijing.

Only 15% of Europeans believe that the EU is engaged in a Cold War against China. The percentage is so low that one wonders if there should even be such a question. It is not only not a priority, it is not even a question on the agenda for Europeans. Even at the highest point of EU “hawkishness”, only 33% of Swedes hold the view that their country is currently in a Cold War with China.  Leonard and Krastev warn that if Washington and Brussels are preparing for an all-in generational struggle against China, this runs against the grain of opinion in Europe, and leaders in Washington and Brussels will quickly discover that they “do not have a societal consensus behind them”.

“The European public thinks there is a new cold war – but they don’t want to have anything to do with it. Our polling reveals that a “cold war” framing risks alienating European voters”, Mark Leonard said.

The EU doesn’t have the backing of its citizens to follow the US in its new Cold War pursuit. But unlike the views of the authors of the study, my view is that this is not a transatlantic rift that we actually have to be trying to fix. Biden’s China policy won’t be Europe’s China policy, and that’s that, despite US efforts to persuade Europe to follow, as I’ve argued months ago for the Brussels Report and in Modern Diplomacy.

In March this year, Gallup released a poll that showed that 45% of Americans see China as the greatest US enemy. The poll did not frame the question as Cold War but it can be argued that Joe Biden has some mandate derived from the opinion of American people. That is not the case for Europe at all, to the extent that most of us don’t see “China as an enemy” even as a relevant question.

The US’s China pursuit is already giving horrible for the US results in Europe, as French President Macron withdrew the French Ambassador to the US. The US made a deal already in June, as a part of the trilateral partnership with the UK and Australia, and stabbed France in the back months ago to Macron’s last-minute surprise last week. Max Boot at the Council on Foreign Relations argues that it is Macron that is actually arrogant to expect that commitments and deals should mean something: “Back in February, Macron rejected the idea of a U.S.-E.U. common front against China. Now he complains when America pursues its own strategy against China. What’s French for chutzpah?” What Boot does get right is that indeed, there won’t be a joint US-EU front on China, and European citizens also don’t want this, as the recent poll has made clear.

The US saying Europe should follow the US into a Cold War with China over human rights is the same thing as China saying that Europe should start a Cold War with the US over the bad US human rights record. It’s not going to happen. You have to understand that this is how ridiculous the proposition sounds to us, Europeans. Leonard and Krastev urge the EU leadership to “make the case for more assertive policies” towards China around European and national interests rather than a Cold War logic, so that they can sell a strong, united, and compelling case for the future of the Atlantic alliance to European citizens.

I am not sure that I agree, as “more assertive policies” and “cold war” is probably the same thing in the mind of most Europeans and I don’t think that the nuance helps here or matters at all. Leaders like Biden argue anyway that the US is not really pursuing a Cold War. The authors caution EU leaders against adopting a “cold war” framing. You say “framing”, I say “spin”. Should we be in engaging in spins at all to sell unnecessary conflict to EU citizens only to please the US?

Unlike during the first cold war, [Europeans] do not see an immediate, existential threat”, Leonard clarified. European politicians can no longer rely on tensions with China to convince the electorate of the value of transatlantic relations. “Instead, they need to make the case from European interests, showing how a rebalanced alliance can empower and restore sovereignty to European citizens in a dangerous world”, Mark Leonard added. The study shows that there is a growing “disconnect” between the policy ambitions of those in Brussels and how Europeans think. EU citizens should stick to their sentiments and not be convinced to look for conflict where it doesn’t exist, or change what they see and hear with their own eyes and ears in favor of elusive things like the transatlantic partnership, which the US itself doesn’t believe in anyways. And the last thing that should be done is to scare Europeans by convincing them they live in a “dangerous world” and China is the biggest threat or concern.

What the study makes clear is that a Cold War framing against China is likely to repel more EU voters than it attracts, and if there is one thing that politicians know it is that you have to listen to the polls in what your people are telling you instead of engaging in spins. Those that don’t listen in advance get the signs eventually. At the end of the day it’s not important what Biden wants.

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Europe

Germany and its Neo-imperial quest

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In January 2021, eight months ago, when rumours about the possibility of appointment of Christian Schmidt as the High Representative in Bosnia occurred for the first time, I published the text under the title ‘Has Germany Lost Its NATO Compass?’. In this text I announced that Schmidt was appointed to help Dragan Čović, the leader of the Croatian HDZ party, to disrupt the constitutional structure of Bosnia-Herzegovina and create precoditions for secession of the Serb- and Croatian-held territories in Bosnia and the country’s final dissolution. I can hardly add anything new to it, except for the fact that Schmidt’s recent statements at the conference of Deutsche Atlantische Gesellschaft have fully confirmed my claims that his role in Bosnia is to act as Čović’s ally in the latter’s attempts to carve up the Bosnian Constitution.

Schmidt is a person with a heavy burden, the burden of a man who has continuously been promoting Croatian interests, for which the Croatian state decorated him with the medal of “Ante Starčević”, which, in his own words, he “proudly wears” and shares with several Croatian convicted war criminals who participated in the 1992-1995 aggression on Bosnia, whom Schmidt obviously perceives as his ideological brethren. The question is, then, why Germany appointed him as the High Representative in Bosnia? 

Germany’s policy towards Bosnia, exercised mostly through the institutions of the European Union, has continuously been based on the concept of Bosnia’s ethnic partition. The phrases that we can occassionaly hear from the EU, on inviolability of state boundaries in the Balkans, is just a rhetoric adapted to the demands by the United States to keep these boundaries intact. So far, these boundaries have remained intact mainly due to the US efforts to preserve them. However, from the notorious Lisbon Conference in February 1992 to the present day, the European Union has always officially stood behind the idea that Bosnia-Herzegovina should be partitioned along ethnic lines. At the Lisbon Conference, Lord Carrington and Jose Cutileiro, the official representatives of the then European Community, which has in the meantime been rebranded as the European Union, drew the maps with lines of ethnic partition of Bosnia-Herzegovina, along which the ethnic cleansing was committed, with 100.000 killed and 1,000.000 expelled, so as to make its territory compatible with their maps. Neither Germany nor the European Union have ever distanced themselves from the idea they promoted and imposed at the Lisbon Conference as ‘the only possible solution’ for Bosnia, despite the grave consequences that followed. Nor has this idea ever stopped being a must within their foreign policy circles, as it has recently been demonstrated by the so-called Janša Non-Paper, launched a couple of months ago, which also advocates the final partition and dissolution of Bosnia-Herzegovina. Such a plan is probably a product of the powerful right-wing circles in the European institutions, such as Schmidt’s CSU, rather than a homework of Janez Janša, the current Prime Minister of Slovenia, whose party is a part of these circles, albeit a minor one. To be sure, Germany is not the original author of the idea of Bosnia’s partition, this author is Great Britain, which launched it directly through Lord Carrington at the Lisbon Conference. Yet, Germany has never shown a will to distance itself from this idea, nor has it done the European Union. Moreover, the appointment of Schmidt, as a member of those political circles which promote ethnic partition as the only solution for multiethnic countries, testifies to the fact that Germany has decided to fully apply this idea and act as its chief promoter.

In this process, the neighbouring countries, Serbia and Croatia, with their extreme nationalist policies, can only act as the EU’s proxies, in charge for the physical implemenation of Bosnia’s pre-meditated disappearance. All the crimes that Serbia and Croatia committed on the Bosnian soil – from the military aggression, over war crimes, ethnic cleansing and genocide, up to the 30 year-long efforts to undermine Bosnia’s sovereignty and territorial integrity – have always had a direct approval and absolute support of the leading EU countries. During the war and in its aftermath, Great Britain and France were the leaders of the initiatives to impose ethnic partition on the citizens of Bosnia-Herzegovina, and now Germany has taken up their role. In such a context, the increasing aggressiveness of Serbia and Croatia can only be interpreted as a consequence of the EU’s intention to finish with Bosnia for good, and Schmidt has arrived to Bosnia to facilitate that process. Therefore, it is high time for the citizens of Bosnia-Herzegovina to abandon any ilussions about the true intentions of the European Union and reject its Trojan Horse in the form of the current High Representative.  

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Europe

Should there be an age limit to be President?

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The presidential elections in Bulgaria are nearing in November 2021 and I would like to run for President of Bulgaria, but the issue is the age limit.

To run for President in Bulgaria a candidate needs to be at least 40 years old and I am 37. I am not the first to raise the question: should there be an age limit to run for President, and generally for office, and isn’t an age limit actually age discrimination?

Under the international human rights law standard, putting an age limit is allowed in the context of political participation under the right to vote and the right to run to be elected. Human Rights Committee General Comment No.25 interpreting the International Covenant on Civil and Political Rights states that an age limit has to be based on objective and reasonable criteria, adding that it is reasonable to have a higher age requirement for certain offices. As it stands, the law says that having an age limit for president is not age discrimination, but is 40 actually a reasonable cut-off? National legislations can change. We need to lower the age limit and rethink what’s a reasonable age for President, and not do away with all age limits.

We have seen strong leaders emerge as heads of state and government who are below 40 years of age. Sanna Marin, Prime Minister of Finland, became Prime Minister at 34. Sebastrian Kurz, the Prime Minister of Austria, was elected at 31. Jacinda Ardern, Prime Minister of New Zealand, assumed her position at 37. So perhaps it is time to rethink age limits for the highest offices.

The US has plenty of examples where elected Senators and Congressmen actually beat the age limit and made it despite the convention. The age limit for Senator in the US is 30 years old. Rush Holt was elected to the US Senate at 29. In South Carolina, two State Senators were elected at 24 years old and they were seated anyways. The age limit for US president is 35 years old.

In Argentina, the age cut-off is 30. In India, it is 35. In Pakistan, it is 45 years old. In Turkey, it is 40 years old. Iceland says 35 years old. In France, it is 18.

Generally, democracies set lower age limits. More conservative countries set the age limit higher in line with stereotypes rather than any real world evidence that a 45 year-old or 55 year-old person would be more effective and better suited to the job. Liberal countries tend to set lower age limits.

40 years old to be a President of Bulgaria seems to be an arbitrary line drawn. And while it is legal to have some age limits, 40 years old seems to be last century. Changing the age limit for president of Bulgaria could be a task for the next Bulgarian Parliament for which Bulgarians will also vote on the same date as they vote for President.

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