US threatens sanctions against European allies for trade with Iran: report

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The United States has sent a warning to its European allies that they might face sanctions if the financial vehicle they set up for sustaining trade with Iran goes into effect, US media reported on Wednesday.

Britain, France, and Germany announced in January the creation of INSTEX (Instrument in Support of Trade Exchanges), which is a new mechanism for facilitating trade with Iran in order to preserve the Iran nuclear deal.

In her letter to INSTEX President Per Fischer on May 7, US Under Secretary of Treasury for Terrorism and Financial Intelligence, Sigal Mandelker, suggested that INSTEX, as well as anyone associated with it, could be barred from the US financial system if it goes into effect, according to Bloomberg that obtained the letter.

"I urge you to carefully consider the potential sanctions exposure of INSTEX," Mandelker wrote in the letter. "Engaging in activities that run afoul of US sanctions can result in severe consequences, including a loss of access to the US financial system."

An anonymous US official, who is familiar with the matter, revealed that the letter was intended to serve as a warning that Washington would punish anyone associated with INSTEX if they were working to set up a program to help Iran evade US sanctions, the report said.

The European Union's top diplomat Federica Mogherini said earlier this month that she discussed with foreign ministers of France, Germany and Britain the ways to sidestep US sanctions and facilitate trade with Iran.

"We discussed the ways in which we can further advance, for instance, on the operationalization of INSTEX to have transactions in the hopefully next few weeks," Mogherini said.

The United States and its European allies have been at feud with each other on the Iran nuclear deal. The European Union reiterated its support for the nuclear deal despite mounting pressure from the United States on Iran.

For its part, Iran urges that the support from the European signatories should go beyond mere political supports.