The U.S. Secondary Sanctions and the Exit Strategy of European Companies from Iran

Document Type : Research

Authors

1 Ph.D. in Regional Studies (European studies), Faculty of Law and Political Sciences, University of Tehran Senior researcher of Iran-Europe relations

2 Assistant Professor of Regional Studies Department, university of Tehran

Abstract

The United States has increasingly relied on sanctions as a key strategy to influence and change the actions of other countries, taking advantage of the dollar's supremacy in the international financial system. To enforce compliance with U.S. sanctions regulations "Secondary sanctions" specifically target foreign companies, banks, and individuals, compelling them to either cease business with U.S.-sanctioned entities or lose access to the extensive U.S. market, thereby enforcing compliance with U.S. sanctions policies. By 2022, 68% of these sanctions, issued through the U.S. Treasury Department’s Specially Designated Nationals (SDN) List, were directed against Iran. The research seeks to explain why, despite the European Union's efforts to mitigate the extraterritorial effects of these sanctions, European firms continued to comply with U.S. sanctions. The research hypothesis posits that two factors shaped European companies' decision to exit Iran: (1) the rational cost-benefit and risk-aversion approach of European companies within the framework of asymmetric transatlantic interdependence, and (2) the lack of strong economic and trade ties between Iran and the European Union. The findings demonstrate that the high level of transatlantic economic interdependence, the sensitivity and vulnerability to shifts in this relationship, and the U.S.'s strategic dominance within this interdependence, significantly heightened the impact of secondary sanctions on European businesses. As a result, these companies adopted risk-averse, cost-benefit strategies in their dealings with Iran. The research employs a qualitative methodology based on a case study approach.

Keywords

Main Subjects

References

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International Political Economy Studies
Volume 7, Issue 2
December 2025
Pages 135-158

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History

  • Receive Date: 29 November 2023
  • Revise Date: 05 June 2024
  • Accept Date: 08 October 2024

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