Policy paper 232

EU and US Sanctions: which sovereignty?

If one accepts Jean-Claude Juncker’s last State of the Union speech in September 2018, “the time for European sovereignty has come.” As if to prove his case, Donald Trump affirmed this before the UN General Assembly a couple of weeks later by declaring that “responsible nations must defend against threats to sovereignty.”

And yet, after a decision by the American president to withdraw from the nuclear agreement with Iran, also known as the Joint Comprehensive Plan of Action (JCPOA), the Europeans will be hit by new extraterritorial US sanctions on 4 November. A similar case arises with Russia, as soon as new US sanctions go beyond those jointly agreed with the European Union. What a shallow sovereignty!

Extraterritoriality generally refers to the unilateral use of measures that are taken under a state’s sovereign powers to enforce its own law, in a territory other than its own, for actions committed outside its territory by entities or people from other countries. This is the case when the United States applies standards and sanctions that it decided on its own.  Any company or individual that is convicted can be punished through their links to the jurisdiction of the United States, such as dollar transactions or the existence of a subsidiary on American territory.

Under such conditions, should the European Union, in the name of its own sovereignty, call into question the practice that the United States has taken it upon itself to make decisions for the rest of the world? If yes, how? If no, what should be done?

This text is the outcome of a workshop with Marie-Hélène Bérard, investment banker, Farid Fatah, Ph.D. candidate in Law, Pascal Lamy, President emeritus of the Jacques Delors Institute, Louis Schweitzer, Honorary Chairman of Renault, and Pierre Vimont, Senior Fellow at Carnegie Europe.