EU moves to shield EU firms from US sanctions against Iran

Iranian Foreign Minister Mohammad Javad Zarif (L) meets with European Union Foreign Policy Chief Federica Mogherini, to discuss Iran's nuclear deal, on May 15, 2018. (AFP)
Updated 18 May 2018
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EU moves to shield EU firms from US sanctions against Iran

  • The move to invoke the “blocking statute” had received the all-clear at a meeting of European Union leaders in Sofia on Thursday as the transatlantic rift deepened
  • The commission said it hopes to have the measure in force before Augut 6 when the first batch of US sanctions take effect

BRUSSELS: The EU launched formal steps Friday aimed at sparing European firms fallout from US sanctions on Iran as part of efforts to preserve the nuclear deal with Tehran.
The move to invoke the “blocking statute” had received the all-clear at a meeting of European Union leaders in Sofia on Thursday as the transatlantic rift deepened.
The European Commission, the EU executive, said Friday it “launched the formal process to activate the blocking statute by updating the list of US sanctions on Iran falling within its scope.”
US President Donald Trump last week controversially pulled Washington out of the 2015 international deal with Iran that placed limits on its nuclear program in return for easing economic sanctions.
The “blocking statute,” which EU member states and the European Parliament must still endorse, is aimed at easing the fears of European companies that invested in Iran after the deal.
“The blocking statute forbids EU companies from complying with the extraterritorial effects of US sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgments based on them,” the commission said.
The commission said it hopes to have the measure in force before Augut 6 when the first batch of US sanctions take effect.
The commission also launched “the formal process to remove obstacles for the European Investment Bank (EIB) to decide under the EU budget guarantee to finance activities outside the European Union, in Iran,” the executive said.
“This will allow the EIB to support EU investment in Iran,” it added, noting the measure could help small and medium-sized companies.
The “blocking statute” is a 1996 regulation originally created to get around Washington’s trade embargo on Cuba, which prohibits EU companies and courts from complying with specific foreign sanction laws, and says no foreign court judgments based on these laws have any effect in the European Union.
However, the Cuba row was settled politically, so the blocking regulation’s effectiveness was never put to the test, and its value may lie more in becoming a bargaining chip with Washington.


Dubai real estate market recovery to be seen as of 2022: S&P

Updated 20 February 2019
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Dubai real estate market recovery to be seen as of 2022: S&P

  • The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate
  • S&P was generally comfortable with the credit ratings of the emirate’s banking system

DUBAI: S&P Global, the ratings agency, painted a grim picture for the real estate sector in Dubai, with a meaningful recovery in property prices expected only after 2022.
At a presentation to journalists in the Dubai International Financial Center, S&P analyst Sapna Jagtiani said that under the firm’s “base case scenario,” the Dubai real estate market would fall by between 5 and 10 percent this year, roughly the same as the fall in 2018, which would bring property prices to the levels seen at the bottom of the last cycle in 2010, in the aftermath of the global financial crisis.
“On the real estate side we continue to have a very grim view of the market. While we expect prices to broadly stabilize in 2020, we don’t see a meaningful recovery in 2021. Relative to the previous recovery cycle, we believe it will take longer time for prices to display a meaningful recovery,” she said.
S&P’s verdict adds to several recent pessimistic assessments of the Dubai real estate market. Jagtiani said that conditions in the other big UAE property market, in Abu Dhabi, were not as negative, because “Abu Dhabi never did ramp up as much in 2014 and 2015 as Dubai.” S&P does not rate developers in the capital.
She added that a “stress scenario” could arise if government and royal family related developers — such as Emaar Properties, Meraas, Dubai Properties and Nakheel — which have attractive land banks and economies of scale, continue to launch new developments.
“In such a scenario, we think residential real estate prices could decline by 10-15 percent in 2019 and a further 5-10 percent in 2020. In this case, we expect no upside for Dubai residential real estate prices in 2021, as we expect it will take a while for the market to absorb oversupply,” she said.
S&P recently downgraded Damac, one of the biggest Dubai-based developers, to BB- rating, on weak market prospects.
However, Jagtiani said that, despite the “significant oversupply” from existing projects, several factors should held stabilize the market: Few, if any, major product launches; improved affordability and “bargain hunting” by bulk buyers; and a resurgence of Asian, especially Chinese, investor interest in the market.
Jagtiani also said that government measures such as new ownership and visa regulations and reduction in government fees could help prevent prices falling more sharply, as well as “increased economic activity related to Dubai Expo 2020, which is expected to attract about 25 million visitors to the emirate.”
The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate. “In our view, credit conditions deteriorated in Dubai in 2018, reducing the government’s ability to provide extraordinary financial support to its government related entities (GREs) if needed,” S&P said in a report. “The negative outlook on Dubai Electricity and Water
Authority (DEWA) partly reflects our concern that a real estate downturn beyond our base case could out increased pressure on government finances,” the report said.
It pointed out that about 70 percent of government revenues come from non-tax sources, including land transfer and mortgage registration fees, as well as charges for housing and municipality liabilities, as well as dividends from real estate developers it controls, like Emaar and Nakheel.
S&P was generally comfortable with the credit ratings of the emirate’s banking system, which has an estimated 20 percent exposure to real estate. “Banks in the UAE tend to generally display a good level of profitability and capitalization, giving them a good margin to absorb a moderate increase in risks,” the report said.