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Ammon News - AMMONNEWS - The European Commission will launch the process of activating a law that bans European companies and courts from complying with US sanctions against Iran, after Washington pulled out of the landmark 2015 nuclear deal.

Jean Claude Juncker, president of the European Commission, said on Thursday the commission has a "duty to protect European companies" from American sanctions.

"We now need to act and this is why we are launching the process to activate the 'blocking statute' from 1996. We will do that tomorrow [Friday] morning at 10:30," he told a news conference in the Bulgarian capital, Sofia, after a meeting of EU leaders.

The EU wants to salvage the nuclear deal and its blocking statute is the most powerful tool at its immediate disposal, as it means EU companies won't have to comply with US sanctions.

It also does not recognise any court rulings that enforce American penalties.

Juncker's announcement comes after US President Donald Trump withdrew Washington from the international deal with Iran, which placed limits on its nuclear programme in exchange for sanctions relief.

Britain, France, Germany, China and Russia were signatories of the 2015 pact and have opposed the US pullout.

But companies around the world now face a difficult choice as Washington has threatened to punish firms that violate US sanctions by dealing with Iran.

Blocking Statute
The European Commission's blocking statute is seen by European governments more as a political weapon than a regulation, because its rules are vague and difficult to enforce, serving mainly as a warning to the US.

Juncker said the European Commission has decided to allow the European Investment Bank to facilitate European companies' investment in Iran for the first time. That could allow more euro-dominated loans to Iran.

Al Jazeera's Paul Brennan, reporting from Sofia, said the blocking statute was "outdated", which will limit its effectiveness.

"The 1996 law was used to defend European businesses from US penalties for dealing with Cuba. But the US Congress has since passed new laws that make the EU statute outdated, such as threats to cut off companies' access to the US banking system," he said.

"The blocking mechanism will help small businesses that do not deal with the US, but the big multi-national companies, like Total and Maersk, are dealing in dollars and that means they will be subject to US sanctions if they continue to trade with Iran," he said.

The French energy giant, Total, warned on Wednesday that it will pull out of the multi-billion dollar project to develop the vast South Pars gas field, which started in July 2017, unless it is granted a waiver by US authorities.

Danish shipping giant Maersk Tankers also said Thursday it would cease its activities in Iran, while German insurer Allianz has also announced it plans to wind down its business deals there.

Meanwhile, Russia also moved on Thursday to extend its economic influence in Iran.

In the Kazakh capital, Astana, the Russia-led Eurasian Economic Union trade bloc signed an interim trade deal with Iran that lowers tariffs on hundreds of goods.

The bloc, which also comprises Armenia, Belarus, Kazakhstan and Kyrgyzstan, plans to begin three years of talks with Iran that aim to a free trade zone.

Bijan Zangeneh, Iran's oil minister, also announced that Chinese state-owned oil company CNPC was ready to replace Total in Iran if the French energy giant pulls out.

*Agencies