EU backs Iran sanctions over foiled France attack plot -diplomats

France accused Tehran of targeting a demonstration by Iranian exiles

The EU has backed Iranian sanctions over a foiled attack plot in France. Bloomberg 

European Union foreign ministers on Monday endorsed a French government decision to sanction Iranian nationals accused of a bomb plot in France, a move that could enable EU-wide enforcement of the measures, diplomats said.

The ministers said technical work could now start on a freeze on the EU assets of two Iranians and Iran's intelligence service over a failed plot to carry out a bomb attack at a rally near Paris organised by an exiled Iranian opposition group.

Denmark, which in October said it suspected an Iranian government intelligence service had tried to carry out an assassination plot on its soil, also lobbied for support for similar EU-wide sanctions once its investigation is complete, the diplomats told Reuters.

Though largely symbolic in impact, the EU's readiness to target Iranians marks a shift after months of division within the bloc over how to punish Iranians accused of destabilising activities in Europe and the Middle East.

In October, France said there was no doubt that Iran's intelligence ministry was behind the June plot to attack the demonstration by Iranian exiles near Paris.

It froze assets belonging to Tehran's intelligence services and two Iranian nationals - a Vienna-based diplomat now under arrest in Belgium for the plot and the deputy minister and director general of intelligence, Saeid Hashemi Moghadam.

Neither appear to have had any assets in France. Paris also discreetly expelled an Iranian diplomat, diplomatic sources told Reuters last month.

Eager to save a 2015 nuclear accord with Iran from which the United States has withdrawn, the EU has focused its efforts in trying to keep trade flowing with Iran in the face of renewed U.S. sanctions, in order to keep Tehran from pulling out.

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Under the 2015 deal, Iran restricted its disputed nuclear programme, widely seen in the West as a disguised effort to develop the means to make atomic bombs, in exchange for an end to international sanctions against it.

In March, Britain, France and Germany proposed to sanction Iran over its development of ballistic missiles and its role in Syria's war, but the initiative failed to gather sufficient support across the EU to take effect.

Italy was one EU country unwilling to countenance new measures as it sought to preserve business ties with Iran?.

In an effort to balance Iran policy, the ministers at their meeting on Monday also tried to press ahead in setting up a special mechanism to trade with Iran that could be under EU, not national, law.

The Special Purpose Vehicle (SPV) is a kind of clearing house that could be used to help match Iranian oil and gas exports against purchases of EU goods in an effective barter arrangement circumventing U.S. sanctions, which are based on global use of the dollar for oil sales.

Despite technical difficulties and delays, the EU believes this formula could shield individual member states from being hit by US sanctions that have been reimposed on trade with Iran after Washington's pullout from the nuclear deal.

"There is a willingness for the financial vehicle ... to be set up quickly," French Foreign Minister Jean-Yves Le Drian told reporters.

However, no country has come forward as a potential host. Their reluctance arises from fears that SPV reliance on local banks to smooth trade with Iran may incur U.S. penalties, severing the lenders' access to U.S. markets, diplomats said.

Luxembourg is seen as a good candidate to manage the Iran SPV given its experience setting up a similar mechanism during the 2009-12 euro zone financial crisis.

Luxembourg Foreign Minister Jean Asselborn told Reuters that the country had not been formally asked and he declined to say if it was willing to play host, insisting that firstly, setting it up under EU law could prove a critical step.

"It's a European commitment, not a national commitment. It must therefore be given a basis in European law," he said.

The SPV is seen as the lynchpin of European efforts to salvage the nuclear accord. US President Donald Trump - who took office after the pact was clinched - repudiated it in May, calling it flawed to Iran's advantage.