European politicians treated Donald Trump’s new Iran policy as America going rogue. Europe’s businesses can’t afford to be so dismissive.

On Friday, Trump refused to certify Iran’s compliance with the 2015 nuclear accord, threatened to pull out of it completely, imposed new sanctions and invited Congress to weigh in with more. The European Union rushed to defend the deal, and point out that no single country has the right to terminate it. The U.S. president “has many powers,’’ EU foreign policy chief Federica Mogherini said. “Not this one.’’

But America does have the power to take unilateral action that affects companies everywhere — and has used it in the past. Trump gave Congress 60 days to consider re-imposing curbs on Iran. Some of them could apply to businesses outside the U.S., potentially forcing them to choose between the American and Iranian markets.

“The bottom line for a company is, will it be able to make a profit without getting sued?’’ said Rouzbeh Parsi, director of the Sweden-based European Iran Research Group, which promotes cooperation between Europe and Iran.

On the Fence

The commercial allure of Iran is obvious. It’s a nation of 80 million with oil wealth, a sizeable middle class, and all the pent-up demand that comes from spending a decade shut out of world markets. European giants like Siemens and Total have already signed multi-billion-dollar deals on the back of the 2015 nuclear accord.

Uncertainty over Trump’s Iran intentions is having a dual effect, executives and analysts said. Those already in don’t yet see a reason to pull out. Those on the fence have a new reason to hesitate.

Alireza Haghdoust has clients in both camps. He’s chief executive of Paris-based Andarz Consulting, which helps fashion brands enter Iran. One of his customers, a French retailer scheduled to meet potential partners in Tehran this week, got in touch after Trump’s announcement to say it’ll go ahead with the trip. But Haghdoust cites another client, a large European retailer with business in the U.S., which is interested in Iran but has decided to hold off until Trump’s policy becomes clearer.

“Some are very cautious,’’ said Haghdoust. “Others have a more entrepreneurial streak, and experience in emerging markets.’’

‘We Want Clarity’

Italy’s Azimut Group would be in the latter category. Last week it announced the purchase of a 20 percent stake in Iranian asset management company Mofid Entekhab. Sergio Albarelli, Azimut’s CEO, acknowledges there are risks – but he says they come with the territory.

“Any great opportunity in the last 40 years in emerging markets has been taken assuming some risk,’’ Albarelli said in an interview. He said his acquisition is fully compliant with existing rules and sanctions. Will those rules change? “Maybe. I’m not a politician and I can’t forecast.’’

European officials say they’ll try to shield business from risks associated with America’s shifting policy. “We want clarity, legal security for our companies,’’ French Finance Minister Bruno Le Maire told his U.S. counterpart in Washington on Thursday. David O’Sullivan, the EU ambassador to the U.S., said that if Congress reinstates sanctions, Europe “will act to protect the legitimate interests of our companies with all the means at our disposal.’’

The EU does have tools available. It could use so-called “blocking regulation,’’ applied in the 1990s as a counter to U.S. sanctions, according to Ali Vaez, an Iran analyst at the International Crisis Group. That would bar European firms from complying with unilateral, extra-territorial American measures, and allow the “claw-back’’ of fines imposed by U.S. regulators, Vaez said.

Lawyer Up’

The EU could go further, taking its case to the World Trade Organization or retaliating against American business in Europe, Parsi said. But Europeans may not be ready for a confrontation, he said, and may prefer to defend the nuclear deal “nominally, at the political level,’’ while avoiding proactive steps. That would amount to telling European companies to “lawyer up, or don’t do business.’’

Even before Trump’s U-turn, European companies interested in Iran faced plenty of legal hurdles.

French sports retailer Decathlon has been laying the foundations for its first Tehran store, due to open next year. It sees no reason to give up on a “beautiful opportunity,’’ said Philippe Bernadat, country manager for Iran.

But, as Bernadat tells it, seizing that opportunity has been fraught with problems. For one, the world’s giant data-processing companies – mostly American – don’t want their systems used in Iran. New ones have to be built with Iranian partners. It means “reinventing everything,’’ he said. “It’s taking us a lot of time and energy.’’

Then there’s financing. Several big international banks have been fined by the U.S. over their dealings with Iran. It took Decathlon, which is also in the American market, more than six months to find smaller banks to work with, said Bernadat, and it remains a point of vulnerability. “If tomorrow no bank agrees to finance our projects or transfer funds for us, then of course it would be an extraordinarily difficult situation,’’ he said.

‘Waste of Time’

From the Iranian side, speeding up the flow of investment and trade is the whole point of the deal. If that doesn’t happen, there’s less incentive to stay in it.

In Tehran, Amir Alizadeh, deputy managing director of the German-Iranian Chamber of Commerce and Industries, has seen fewer trade delegations in town this year, and he says larger companies, especially those active in the U.S., are delaying their decisions.

But Alizadeh said he doesn’t see any sign that small and medium-sized businesses he’s engaged with are having second thoughts. On the contrary, many are taking their plans to “the next phases’’ — conducting market research, finding partners, and registering companies.

European governments have encouraged such moves. In recent weeks, the U.K. signed a $720 million solar-energy deal with Iran, and France’s state investment bank Bpifrance pledged almost $600 million of credit to French companies with projects there. Austria is offering export finance.

Will such support expand, shrink or stay the same after Trump’s change of course? Albarelli, the Italian financier, said it would be “very close to a waste of time’’ trying to forecast what politicians will do. And he’s not looking for their help.

In Iran, “we see the economic opportunity,’’ he said. “Obviously there are some political risks. Fine. It’s part of the game.’’

Source www.bloomberg.com