Does Anyone Think the EU Can Successfully Defy US Iran Sanctions?

By effectively making it illegal not to defy US sanctions on Iraq (though more accurately making it not illegal to ignore sanctions), the EU is hoping to win this battle. It's called the 'blocking statute'. Alone, certainly it will have zero effect, but now they're adding more to the mix, including a financial bypass of the US and helped converting to euros from dollars, etc. I know some traders have already halted Iranian crude imports, but also spoken with someone from one of the giant European oil companies who is confident that at least the big boys will come up with a feasible workaround. Wondering what everyone else things. Typically, the EU disappoints me in this areas, but maybe this time around they'll act rather than shuffle paper around endlessly. 

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In my limited opinion, I don't believe the EU's economy is strong enough at this time to defy US sanctions, even if the blocking statute did give EU companies the courage to try.  When company revenue plummets as a result of the new sanctions imposed on those importing from Iran, following by the creditors demanding payment, those companies will have a sudden change of heart.  With the amount of leverage in the world today, it is just too risky to defy the US.  You can get oil anywhere, but there is only one "largest economy in the world."  

Or to put it more simply: they will shuffle paper because right now they have no other choice.

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36 minutes ago, Epic said:

You can get oil anywhere, but there is only one "largest economy in the world." 

Are you really sure the US is still the largest economy in the world ?

Based on the CIA World Factbook data, the largest economy in the world is China, the EU is number 2 and the US only number 3.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html#ch

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17 hours ago, Guillaume Albasini said:

Are you really sure the US is still the largest economy in the world

Yes, I am sure.  

The US is expected to produce $20 trillion in goods this year.  China is expected to only produce $14 trillion.  And your EU numbers are including UK's GDP, which it probably shouldn't.    

You can't use the CIA's PPP numbers for determining the largest economy because the PPP numbers artificially adjust the data to account for lower/higher cost of living and inflation.  This gives China an advantage because it is less expensive to live in China than in the US.  Simply because it is less expensive to live, doesn't mean one can add illusionary value to the total amount of goods produced.  Here is the data from the IMF.  It provides both total values (listed in US dollars) and the nominal values after they have been adjusted for PPP:

https://www.imf.org/external/pubs/ft/weo/2018/01/weodata/weorept.aspx?pr.x=43&pr.y=8&sy=2018&ey=2023&ssd=1&sort=country&ds=.&br=1&c=512%2C946%2C914%2C137%2C612%2C546%2C614%2C962%2C311%2C674%2C213%2C676%2C911%2C548%2C193%2C556%2C122%2C678%2C912%2C181%2C313%2C867%2C419%2C682%2C513%2C684%2C316%2C273%2C913%2C868%2C124%2C921%2C339%2C948%2C638%2C943%2C514%2C686%2C218%2C688%2C963%2C518%2C616%2C728%2C223%2C836%2C516%2C558%2C918%2C138%2C748%2C196%2C618%2C278%2C624%2C692%2C522%2C694%2C622%2C142%2C156%2C449%2C626%2C564%2C628%2C565%2C228%2C283%2C924%2C853%2C233%2C288%2C632%2C293%2C636%2C566%2C634%2C964%2C238%2C182%2C662%2C359%2C960%2C453%2C423%2C968%2C935%2C922%2C128%2C714%2C611%2C862%2C321%2C135%2C243%2C716%2C248%2C456%2C469%2C722%2C253%2C942%2C642%2C718%2C643%2C724%2C939%2C576%2C644%2C936%2C819%2C961%2C172%2C813%2C132%2C726%2C646%2C199%2C648%2C733%2C915%2C184%2C134%2C524%2C652%2C361%2C174%2C362%2C328%2C364%2C258%2C732%2C656%2C366%2C654%2C734%2C336%2C144%2C263%2C146%2C268%2C463%2C532%2C528%2C944%2C923%2C176%2C738%2C534%2C578%2C536%2C537%2C429%2C742%2C433%2C866%2C178%2C369%2C436%2C744%2C136%2C186%2C343%2C925%2C158%2C869%2C439%2C746%2C916%2C926%2C664%2C466%2C826%2C112%2C542%2C111%2C967%2C298%2C443%2C927%2C917%2C846%2C544%2C299%2C941%2C582%2C446%2C474%2C666%2C754%2C668%2C698%2C672&s=NGDPD%2CPPPGDP&grp=0&a=

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On 7/20/2018 at 3:00 PM, Epic said:

Yes, I am sure.  

The US is expected to produce $20 trillion in goods this year.  China is expected to only produce $14 trillion.  And your EU numbers are including UK's GDP, which it probably shouldn't.    

You can't use the CIA's PPP numbers for determining the largest economy because the PPP numbers artificially adjust the data to account for lower/higher cost of living and inflation.  This gives China an advantage because it is less expensive to live in China than in the US.  Simply because it is less expensive to live, doesn't mean one can add illusionary value to the total amount of goods produced.  Here is the data from the IMF.  It provides both total values (listed in US dollars) and the nominal values after they have been adjusted for PPP:

https://www.imf.org/external/pubs/ft/weo/2018/01/weodata/weorept.aspx?pr.x=43&pr.y=8&sy=2018&ey=2023&ssd=1&sort=country&ds=.&br=1&c=512%2C946%2C914%2C137%2C612%2C546%2C614%2C962%2C311%2C674%2C213%2C676%2C911%2C548%2C193%2C556%2C122%2C678%2C912%2C181%2C313%2C867%2C419%2C682%2C513%2C684%2C316%2C273%2C913%2C868%2C124%2C921%2C339%2C948%2C638%2C943%2C514%2C686%2C218%2C688%2C963%2C518%2C616%2C728%2C223%2C836%2C516%2C558%2C918%2C138%2C748%2C196%2C618%2C278%2C624%2C692%2C522%2C694%2C622%2C142%2C156%2C449%2C626%2C564%2C628%2C565%2C228%2C283%2C924%2C853%2C233%2C288%2C632%2C293%2C636%2C566%2C634%2C964%2C238%2C182%2C662%2C359%2C960%2C453%2C423%2C968%2C935%2C922%2C128%2C714%2C611%2C862%2C321%2C135%2C243%2C716%2C248%2C456%2C469%2C722%2C253%2C942%2C642%2C718%2C643%2C724%2C939%2C576%2C644%2C936%2C819%2C961%2C172%2C813%2C132%2C726%2C646%2C199%2C648%2C733%2C915%2C184%2C134%2C524%2C652%2C361%2C174%2C362%2C328%2C364%2C258%2C732%2C656%2C366%2C654%2C734%2C336%2C144%2C263%2C146%2C268%2C463%2C532%2C528%2C944%2C923%2C176%2C738%2C534%2C578%2C536%2C537%2C429%2C742%2C433%2C866%2C178%2C369%2C436%2C744%2C136%2C186%2C343%2C925%2C158%2C869%2C439%2C746%2C916%2C926%2C664%2C466%2C826%2C112%2C542%2C111%2C967%2C298%2C443%2C927%2C917%2C846%2C544%2C299%2C941%2C582%2C446%2C474%2C666%2C754%2C668%2C698%2C672&s=NGDPD%2CPPPGDP&grp=0&a=

Take in mind that PPP and Nominal are like measuring milk in KG or liters instead of dollars

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3 hours ago, Sebastian Meana said:

Take in mind that PPP and Nominal are like measuring milk in KG or liters instead of dollars

Yes, these are kind of difficult concepts to wrap one's head around, and Sebastian, yours was a great explanation.  The best way of thinking about these two concepts is this: if you are wondering which country produces the most goods, you want to use PPP, since you are right Sebastian, PPP is like measuring milk in KG.  However, if you are talking about selling a product, then regardless as to the physical amount you are selling, you always want to get the highest price for your goods.  Thus, if you are a seller, you use GDP as measured in dollars, not PPP as measured in KG (for instance).  In other words, China has the larger market in the sense that it produces more goods (as measured in KG), but the US has a larger market in which to sell those goods.  Think of it like this:

I produce 10KG of milk in China and I can sell it in China for $1 per KG. 

or...

I produce 5KG of milk in the US and I can sell it in the US for $5 per KG. 

Who would you rather be if you are the seller of the milk? 

In my original post, I was talking about selling goods into a market, and when selling goods into a market, the US is clearly the largest market in the world.

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That depends on how serious the threat of barring offenders from the international system of payments is.  Few large companies and no banks will defy the US if this nuclear option is on the table. 

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(edited)

You have heard of too big to fail.  Well the US is too big to openly defy.  Corporations, will not openly defy US sanctions.  However, Iran will probably make it very profitable for some to sneak around the sanctions.  However,  Iran will get much less for their oil selling under the table than if they could sell it openly.  Oil is fungible so that makes it difficult to enforce a boycott on one producer.

Edited by PeterfromCalgary
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Although it will clearly be more difficult for large companies to buy oil from Iran, that is not necessarily true for countries.  China and Russia in particular will benefit in large measure because of lack of competition and the fact that they will not need to use dollars to buy Iranian oil.  This will likely draw Iran more under their sphere of their influence.  Most unfortunately, the US unilateral policy sabotages the moderate political movement in Iran which otherwise would have likely replaced the Iranian hardline policies long before Iran would have been able to restart a nuclear weapons program under the agreement.  Although no country wants to be the one to use nuclear weapons, those weapons are now seen as a necessary shield to prevent perceived powerful enemies from launching an attack.  That is also why Isreal has nuclear weapons.  Hopefully the EU will be able to maintain a working trade relationship with Iran to at least buy the time we need here in the US to reverse our shortsighted unilateral US policy.

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Realistically, no countries in a world endanger its national interests for the benefits of others. In this case, although US has unilaterally  behaved against the norms of  international community in  withdrawing from the accord, But main Iran's partners like China and India are going to preserve their own interests in this battle irrespective of US orders . its the best opportunity to expand their economy with the oil imported from Iran with the lowest possible prices and the best discounts!

In this line, European Union is also strongly determined to preserve its principles / criteria by observing the accord. But it should be noticed that in a free economy, governments have no right or power to put presser on  private companies to follow governmental decisions.

In my opinion, sooner or later, UE makes an excuse to withdraw from the deal as well.  

 

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very well put

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The world is oil threasty not blood, 

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21 minutes ago, Reza Sadeghi said:

The world is oil threasty not blood

Actually, it is money-thirsty.  ...which is why the blood gets involved (the blood drives up the price).  $$$

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The leverage Trump has is simple. The US buys a staggering amount of goods. Do you as a company really want to lose that market for an Iran with a little market and maybe temporary cheaper oil? Most will pick the large market with a history of stability.

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The US is losing importance and influence every year. We will see how this all will end. I presume not the way the majority of people expects.

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