European firms are wary about the prospect of penalties for doing business with Iran, with French oil company Total, Danish shipping group Moller-Maersk and German insurance giant Allianz all announcing they are preparing to exit Iran in order to protect their own interests.
On Thursday, Maersk Chief Executive Soren Skou said he was certain the company was "going to shut down" in Iran. "With the sanctions the Americans are to impose, you can't do business in Iran if you also have business in the U.S., and we have that on a large scale," he told Reuters.
Meanwhile, Total announced Wednesday that it is set to pull-out of a billion dollar gas deal in Iran, called the South Pars 11 (SP11) project. In a statement, Total said it planned to "to unwind all related operations before November 4 unless Total is granted a specific project waiver by the U.S. authorities with the support of the French and European authorities."
American banks are involved in more than 90 percent of Total's financing operations, American shareholders represent more than 30 percent of its shareholding, and U.S. assets represent more than $10 billion of capital employed. Total said it "cannot afford to be exposed to any secondary sanction, which might include the loss of financing in dollars by U.S. banks for its worldwide operations, the loss of its U.S. shareholders or the inability to continue its U.S. operations.
"In these circumstances, Total will not take any further commitment related to the SP11 project."
European nations tried to persuade Trump to not withdraw from the deal, but earlier in May the president made the decision to renege on what he called a "horrible" agreement. Trump said Iran had flouted the deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), which saw international sanctions on the regime dropped in return for Iran curbing its nuclear program.
Trump said the deal had not stopped Tehran developing its ballistic missile program and disagreed with so-called "sunset clauses" that would allow Iran to re-start at a later date its nuclear program — seen by Iran's critics as a way for the nation to build nuclear weapons.
His secondary sanctions would target companies and banks that trade, invest or financially transact with the Iranian government, companies or individuals. Any that do could entail fines. When announcing the U.S.' withdrawal, Trump gave firms up to six months to wind down their business dealings with Tehran.