China, Germany defend Iran ties as Trump bans business with Iran

The United States, which reimposed sanctions against Iran after President trump announced the withdrawal from its 2015 nuclear deal with Tehran (See: Markets cheer as Iran, West clinch nuclear deal), on Tuesday threatened to penalise businesses from third countries that continue to operate there. 

But, Trump’s warning to the world against doing business with Iran as Washington reimposed "the most biting sanctions ever" on the Islamic republic, only helped to trigger a mix of anger, fear and defiance in Tehran and elsewhere.

Beijing and Berlin were more vocal in expressing their growing anger against the US reimposing sanctions against Iran and its threat to penalise businesses from third countries that continue to operate there.

“China has consistently opposed unilateral sanctions and long-armed jurisdiction,” the Chinese foreign ministry said.

The German government said US sanctions against Iran that have an extra-territorial effect violate international law, and Germany expects Washington to consider European interests when coming up with such sanctions.

The announcement of new US sanctions has spooked investors and triggered a run on the Iranian rial before the punishing sanctions went back into force.

The newly reimposed sanctions, which target access to US banknotes and key industries such as cars and carpets, were unlikely to cause immediate economic turmoil.

Iran's markets were actually relatively buoyant, with the rial strengthening by 20 per cent since Sunday after the government relaxed foreign exchange rules and allowed unlimited, tax-free gold and currency imports.

The second tranche of sanctions, which kicks in on 5 November and targets Iran's vital oil sector, could be far more damaging — even if several key customers such as China, India and Turkey refuse to significantly cut their purchases.

"The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level," Trump wrote on Twitter.

"Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less," he said in an other.

Within hours of the sanctions taking effect, German carmaker Daimler said it had "suspended our already limited activities in Iran in accordance with the applicable sanctions."

Trump said on Monday that he was open to new talks to reach a "more comprehensive deal" with Iran.

"We want to see a much broader retreat by Iran from their support for international terrorism, their belligerent military activity in the Middle East and their ballistic missile, nuclear-related programmes," National Security Advisor John Bolton told Fox News.

"There's a lot going on here that Iran needs to be held accountable for."

But Iranian President Hassan Rouhani has dismissed the idea of talks while sanctions are in effect, and accused America of waging "psychological warfare."

British Foreign Office Minister Alastair Burt said that the "Americans have really not got this right." The nuclear deal was important "not only to the region's security but the world's security," he told the BBC.

Russia's foreign ministry said it was "deeply disappointed" by the return of sanctions, adding that it would do "everything necessary" to save the 2015 nuclear deal.

Iranian foreign minister Mohammad Javad Zarif told reporters that the global reaction to Trump's move showed that the US was diplomatically isolated.

European countries, hoping to persuade Tehran to continue to respect the deal, have promised to try to lessen the blow of sanctions and to urge their firms not to pull out. But that was unlikely.

Most European companies have quit Iran, arguing that they cannot risk their US business.

Among those that have suspended plans to invest in Iran are France’s oil major Total, big carmakers PSA and Renault, and their German rival Daimler.

Danish engineering company Haldor Topsoe, one of the world’s leading industrial catalyst producers, said on Wednesday it would cut around 200 jobs from its workforce of 2,700 due to the new US sanctions on Iran, which made it very hard for its customers there to finance new projects.

The chief executive of reinsurance group Munich Re said it may abandon its Iran business under pressure from the United States, but described the operation as very small.

Turkey, however, said it would continue to buy natural gas from Iran.