The United States increased pressure on European banks and firms that engage in a special European Union initiative to protect trade with Iran, warning them on Thursday that they will be at risk from newly reimposed U.S. sanctions, Reuters reported.

“European banks and European companies know that we will vigorously enforce sanctions against this brutal and violent regime,” the U.S. Special Representative, Brian Hook, said in a telephone briefing with reporters.

“Any major European company will always choose the American market over the Iranian market,” Hook charged. The biggest European companies have already pulled out of Iran, among them French oil giant Total and German engineering conglomerate Siemens.

Hook observed it was, therefore, “no surprise” that EU efforts to establish a so-called Special Purpose Vehicle (SPV) were collapsing over fear in EU capitals that hosting it would provoke U.S. punishment.

The SPV is a central part of European attempts to salvage the 2015 nuclear accord with the Islamic Republic, aiming to circumvent the U.S. sanctions regime. However, negotiations over the initiative are proving difficult and no country is keen to host the SPV. The main European powers — Germany, France, and Britain — are putting pressure on the Benelux states after Austria refused to manage the plan, threatening its viability.

In theory, the SPV would act as a financial and commercial intermediary for exports and imports between Iran and the EU and will be open to other countries that are trading with Iran. It would use Euros or sterling, rather than U.S. dollars, to minimize the exposure of participating businesses to U.S. sanctions.

The EU had wanted to have the SPV set up by this month, but six senior diplomats told Reuters this week that the initiative was on the brink of collapse. “Austria has indeed refused. It’s not dead, but it’s not going in the right direction. We are going to try again with Luxembourg, but we’re under no illusions,” a European official said on Wednesday.

Hook, meanwhile, reiterated a warning that attempts to bypass U.S. sanctions was sending “the wrong signal, at the wrong time,” and instructed EU business to stop trading with Iran or face serious consequences.

Hook stressed, however, that waivers were granted to eight of Iran’s biggest oil importers to ensure the U.S. sanctions regime did not harm allies or raise oil prices. “We have looked at these on a case by case basis, taking into account the unique needs of friends and partners, and also ensuring that as we impose sanctions on Iran’s oil sector that we do not lift the price of oil,” Hook said.

[Photo: Tasnim News ]