Page 9 - MEOG Week 01 2021

MEOG POLICY & SECURITY MEOG

EU court to allow Euro firms to

end Iran contracts to avoid losses

IRAN EUROPEAN companies can terminate con- infringe the freedom to conduct a business...by
tracts with Iranian firms subject to US sanctions leading to disproportionate economic loss”.
if continuing with the deals would lead to “dis- At the same time, the Hamburg judges must
proportionate economic loss,” the EU’s top court, take into account that Deutsche Telekom did not
the European Court of Justice (ECJ), has said in apply for an exemption from the EU blocking
a judgment. statute’s rules, the ECJ was reported as saying.
The judgment was made just prior to Christ-
mas after the German branch of Iran’s state- Sri Lankan tea
owned Bank Melli lodged a lawsuit against Meanwhile, Sri Lanka has announced plans to
Deutsche Telekom after the telecommunications settle a debt for past oil imports from Iran by
company ended a contract with the bank in 2018 paying it off in tea.
prior to its date of expiry. Government minister Ramesh Pathirana said
The Higher Regional Court in Hamburg will his country intended to dispatch $5mn worth of
now have to judge whether upholding the con- tea to Iran each month to clear a $251mn debt.
tract with Bank Melli would expose Deutsche Pathirana said that the method of payment
Telekom—which makes around half of its turn- would not violate United Nations or American
over from its US business, meaning it could be sanctions because tea was categorised as a food
a clear target for American secondary sanctions item on humanitarian grounds. Also, he pointed
in response to business with Iran—to a dispro- out, no blacklisted Iranian banks would partici-
portionate economic loss as described by the pate in the scheme.
ECJ ruling. “We hope to send $5m worth of tea each
After former US president Donald Trump month to repay Iran for oil purchases pending
reintroduced heavy sanctions against Iran from since the last four years,” he told Reuters when
the spring of 2018, the European Union issued the plans were announced prior to Christmas
a “blocking statute” that prohibited individuals Eve. Prior to the New Year, Iran announced that
and companies in the bloc from complying with it would welcome the use of the scheme to pay
the sanctions. off the debt.
The ECJ backed the blocking statute in its rul- Sri Lanka is experiencing a severe debt and
ing, noting that “the prohibition imposed by EU foreign exchange crisis. This has been exacer-
law on complying with secondary sanctions laid bated by the loss of tourist income during the
down by the United States against Iran may be coronavirus pandemic. A member of the coun-
relied on in civil proceedings”, Reuters reported. try’s tea board was quoted by the BBC as saying
But the judges, the news agency added, also this was the first time tea had been bartered by
said that the rules of the blocking statute “cannot Sri Lanka to settle foreign debt.™

Week 01 05•January•2022 www. NEWSBASE .com P9