European allies pushed back when Trump sanctioned Iran’s banks

Germany, France and Britain urged the Trump administration in late October to reconsider broad, new sanctions against Iran’s banks, arguing that the move would deter legitimate humanitarian trade and hurt the allies’ common interests, diplomatic correspondence shows.

Germany’s Bundesbank also kept a multi-billion-euro deposit facility open for Iranian banks, including two that faced fresh U.S. sanctions, giving Tehran a much-needed banking lifeline at a time its access to the global financial system was largely cut off, according to central bank data and interviews with bankers, Western diplomats and officials.

The behind-the-scenes pushback to Washington and the extent of Germany’s support to Iranian trade in the face of U.S. sanctions have not been previously reported, and shed new light on the divergent approaches to Iran taken by President Donald Trump and the U.S. allies.

The letter came after the United States imposed sanctions on October 8 against 18 Iranian banks as part of a campaign to exert “maximum pressure” on Tehran. The order barred Americans further from dealing with the Iranian banks and extended secondary sanctions on foreign companies that did business with those lenders. For foreign banks, violations could mean losing access to the U.S. market and raise the spectre of hefty penalties, even although U.S. sanctions, legally speaking, don’t apply in Europe and other jurisdictions.

In their joint letter, dated October 26, diplomats from the three European nations told Washington that the sanctions could make food and medicine “prohibitively expensive” for ordinary Iranians in the middle of the pandemic.

“The US has always said that its aim was to target the ruling elite and not the Iranian population,” according to the letter, a copy of which was seen by Reuters. “In our view it is important to uphold this undertaking in practice.”

European allies pushed back when Trump sanctioned Iran’s banks