Already in the deep-freeze, US-Iran relations suffered another icy blast on October 3 as Washington announced it was scrapping a decades-old friendship treaty with the Iranians after Tehran successfully cited the document in an international court case against the Trump administration’s sanctions policy.

Simultaneously, Iran attempted to add warmth to its relations with Europe as Iranian President Hassan Rouhani praised the EU for taking a “big step” towards preserving business with his country despite Washington’s demands that the Europeans should fall in line with its renewed heavy sanctions regime.

"I'm announcing that the US is terminating the 1955 Treaty of Amity with Iran. This is a decision, frankly, that is 39 years overdue," US Secretary of State Mike Pompeo told reporters on October 3, referring to the year of the 1979 Islamic Revolution.

Pompeo acted after the top UN court ordered the US to ease sanctions it reimposed on Iran following the unilateral withdrawal of Washington in early May from the 2015 multilateral nuclear accord between Tehran and six world powers.

The 1955 Treaty of Amity, Economic Relations, and Consular Rights called for "friendly relations" between Iran and the US. It also encouraged mutual trade and investment, regulated diplomatic ties, and granted the International Court of Justice (ICJ), sometimes referred to as the World Court, jurisdiction over disputes.

ICJ decisions on disputes between UN member states are binding and cannot be appealed. But the court has no mechanism with which to enforce its decisions.

US President Donald Trump is attempting to throttle Iran’s economy with sanctions. He wants to force Tehran to reshape its role in Middle East affairs.

The sanctions squeeze has had a severe effect on Iran's economy. The value of the Iranian rial has plummeted, inflation—by some estimates—is running at 250% and foreign investors have fled the country fearing exposure to secondary sanctions levied by the US. By November 5, Trump wants to see a complete worldwide embargo on Iranian oil exports. If enough countries join that embargo, it could deal a potential knockout blow to the Iranians' economic situation.

Iran pushed back against the reinstatement of sanctions—under the nuclear deal abandoned by Trump it was protected from heavy sanctions in return for compliance with measures that curbed its nuclear development programme—in a case filed in July at the ICJ in The Hague. The US was guilty of "economic aggression" and the sanctions breached the friendship treaty between the two countries, the Iranians argued.

US lawyers countered that the reimposition of the sanctions was legal and a national security measure that could not be challenged at the UN court.

ICJ: Allow "humanitarian" goods
In a preliminary ruling, the ICJ said on October 3 that exports of "humanitarian" goods such as medicines and medical devices, food, and agricultural commodities" should be allowed, as should shipments of aviation safety equipment.

US sanctions stopping the flow of such goods did indeed breach the treaty, the court said. The court's president, Judge Abdulqawi Ahmed Yusuf, said the sanctions on goods "required for humanitarian needs ... may have a serious detrimental impact on the health and lives of individuals on the territory of Iran".

Sanctions on aircraft spare parts, equipment, and associated services have the "potential to endanger civil aviation safety in Iran and the lives of its users”, he added.

The ruling is a decision on provisional measures. It could take the court years to come to a final decision on the entire lawsuit.

Pompeo told a press briefing the ruling “marked a useful point for us to demonstrate the absolute absurdity of the Treaty of Amity between the United States and the Islamic Republic of Iran". The US was "disappointed" that the ICJ "failed to recognise that it has no jurisdiction to issue any order relating to these sanctions measures with the US, which is doing its work on Iran to protect its own essential security interests".

Pompeo added that Washington would work to ensure it provides humanitarian assistance to the Iranian people.

Iranian Foreign Minister Mohammad Javad Zarif called the court decision "another failure for the sanctions-addicted” US government. It was a “victory for the rule of law", he added.

Iran’s Foreign Ministry said the ruling proved "the US sanctions against people and citizens of our country are illegal and cruel".

Europe's help "better than expected"
Joining in Rouhani’s praise of Europe—the EU and major power signatories that remain in the nuclear deal, namely the UK, France, Germany, Russia and China object to the US ending its participation in the nuclear deal, pointing out that the Iranians have honoured their side of the agreement—Zarif told the BBC on October 3 that support from Europe to preserve economic ties with the Islamic Republic in the face of the American pressure had proved “better than expected”.

“To maintain financial and monetary relations in Iran, Europe has formed a special body... Europe has taken a big step,” Rouhani was quoted as saying by Tasnim news agency, in a reference to the EU effort to create a Special Purpose Vehicle (SPV) that will facilitate foreign trade with Iran while protecting traders from the secondary sanctions reach of the US. Brussels says the SPV might be ready for initial trading by early November.

Rouhani, a pragmatist and centrist who entered into the nuclear accord despite howls of protest from hardliners who said the US could not be trusted, added that the Trump administration was “extremely angry” with Europe’s decision.

European diplomats have described the SPV proposal as a means to create a sophisticated barter system, similar to one used by the Soviet Union during the Cold War. Iranian crude oil is to be exchanged for European goods without money changing hands. For example, Iran could ship oil to a German firm and the credit generated by that transaction could then be used to pay a French manufacturer for goods shipped the other way. There would be no transparency as to who is using the system.

Countries outside Europe might be invited to use the mechanism.