The US cutting off access to the global financial system is a powerful weapon. From Tho Bishop at mises.org:
Only CNN was surprised by Donald Trump’s recent announcement that he was pulling the United States out of the Iran Deal negotiated by his predecessor. Following the same failed approach of the last Republican administration, the President opted for confrontation with the Iranian regime rather than uplifting more moderate factions within the country through trade. The decision has already increased tensions in the volatile region, with Iran and Israel exchanging fire in Syria.
Meanwhile European leaders are meeting Iranian officials to try to design a way to bypass new American sanctions. Others have vocally attacked Trump’s actions and attacked the US playing the role of “economic policeman.”
As French Finance Minister Bruno Le Maire said after the decision:
Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers? Or do we want to say we have our economic interests, we consider we will continue to do trade with Iran?
According to reports, European officials are looking at a few different options to help salvage their economic relationship with Iran.
One is by reviving “blocking statutes” such as the ones the EU threatened in response to sanctions on Cuba, Libya, and Iran in the 1990s. The mechanism works similar to the anti-commandeering doctrine, ordering European officials to refuse to comply with US sanctions. As Reuters notes, blocking statutes have “never been used and is seen by European governments more as a political weapon.” They were successful in the past because the Clinton Administration simply backed down, something that seems unlikely with President Trump.
The other is to establish new financial institutions with no connection to the US financial system. Iran has already made the euro the official reporting currency for foreign exchange, so on the surface this seems like a viable alternative.
The problem European decision makers face, however, is that the US has gone to great lengths to militarize the banking industry in recent years.
To continue reading: Iran Sanctions a Reminder of How America Militarized the Financial System