As part of its efforts to salvage the nuclear deal, the European Union has agreed to add Iran to the list of countries that its lending arm, the Luxembourg-based European Investment Bank (EIB), is permitted to do business with—but the development bank’s president, Werner Hoyer, said on July 18 that its global operations would be put at risk if it were to invest in the Islamic Republic.

Hoyer is quite entitled to take that line—the EU executive has made it clear that the addition of Iran to the list, to take effect from August, in no way forces the EIB to begin lending—but it will add to scepticism in Iran as to whether the major European powers are going to deliver enough viable economic measures to maintain the multilateral nuclear accord as a pact worth staying in for Tehran, following the unilateral withdrawal from the agreement by the US in May.

The EIB will only lend in Iran if it receives approval for the move from its board of governors, namely the finance ministers of the EU’s 28 member states, and finds acceptable projects to invest in. “There is no European bank which is presently able to do business in and with Iran,” Hoyer told reporters. “We have to take note of the fact that we would risk the business model of the bank if we were active in Iran.”

Iran’s economy is enduring an intensifying economic assault mounted by Washington as it attempts to use heavy sanctions to force the Iranians to renegotiate the nuclear deal, or perhaps even to cause enough economic havoc to prompt a serious attempt at regime change. Part of that strategy involves targeting sanctions at any foreign banks and companies that choose to remain in business with Iran despite the Trump administration’s request that they refrain from doing so.

Hoyer was reported by Reuters as saying that while he supported EU efforts to keep alive the 2015 pact which curbed Tehran’s nuclear ambitions in exchange for the withdrawal of heavy sanctions, Iran is a place “where we cannot play an active role”.

Ability to raise money in US ‘may be jeopardised’
The not-for-profit lender is anxious that any dealings with Iran would jeopardise its ability to raise money on US markets and have far-reaching consequences for its operations. Hoyer told the news agency the EIB is indebted by €500bn in bond issues.

Known EU moves to try to compensate for the impact of the renewed US sanctions and guarantee Iranian oil revenue—the US is attempting to decimate Iran’s oil export customer base by as soon as November—include EIB lending, a “blocking statute” measure to shield small and medium sized EU businesses from US secondary sanctions, state-backed export guarantees and a plan for EU governments to make direct money transfers to Iran’s central bank.

Brussels has also sought US waivers from sanctions for big European businesses, but Washington has refused the application.

Central bank transfers to Iran to pay for oil imports and avoid US sanctions, proposed by the European Commission in May, were still under discussion, diplomats told Reuters.

Few companies have taken advantage of euro-denominated financing set up by European countries to 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 2017-2018 financial year.