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German Auto Giant Daimler Quits Iran, Citing U.S. Sanctions Threat

Daimler trucks (file photo)

German auto giant Daimler halted its business activities in Iran hours after U.S. President Donald Trump vowed to block any company operating in Iran from selling in the vast U.S. marketplace.

"We have suspended our already limited activities in Iran in accordance with the applicable sanctions," a Daimler spokeswoman said on August 7.

The move brings a sudden end to Daimler's expansion plans in Iran, where it was teaming up with two local firms to assemble Mercedes-Benz trucks.

Daimler's decision to quit Iran, while heeding Trump's threats to penalize sanctions violators, also flies in the face of European Union leaders, who have vowed to maintain business ties and honor Iran's 2015 nuclear deal with world powers, which the Trump administration abandoned in April.

Despite measures put in place by the EU to encourage European businesses to stay in Iran, Daimler became the latest in a string of giant European corporations to say they are getting out of Iran because they value doing business with the United States.

French oil giant Total and carmakers PSA and Renault have also said they are withdrawing from Iran, while European aircraft giant Airbus suspended plane deliveries after Washington announced it would reimpose sanctions.

"Anyone doing business with Iran will NOT be doing business with the United States," Trump tweeted on August 7, calling the first wave of renewed U.S. sanctions on Iran's auto, aircraft, Persian carpet, and other sectors "the most biting sanctions ever imposed."

White House National Security Adviser John Bolton told the Fox Business Network on August 7 that the continued exodus of major European companies from Iran shows that the U.S. sanctions are already working.

"The European governments are still holding to the nuclear deal, but honestly their businesses are running from it as fast as they can, so that the effect of the American sanctions really is proceeding regardless," he said.

"Business people know. They want to do business with the United States, and if it's a choice between us or Iran, that's a pretty easy choice for them," he said.

Bolton, a longtime hawk on Iran, predicted that European efforts to keep Iranian oil exports flowing after a second round of oil-targeted sanctions takes effect in November will also be thwarted.

With major shipping companies suspending their contracts to deliver Iranian oil, Bolton suggested to Fox that "maybe bureaucrats in European capitals, and particularly the bureaucrats in Brussels, are going to get buckets and transport that Iranian oil out of the country."

Daimler had been one of the first big European companies to return to Iran after years of sanctions over its nuclear program, signing a letter of intent in 2016 to manufacture and sell Mercedes trucks in a joint venture with Iran's Khodro Diesel (IKD) and Mammut Group.

But Daimler stressed on August 7 that it had not yet started making or selling any trucks in Iran, nor was it selling any passenger cars there.

"We continue to monitor closely the political developments, particularly with regard to the future of the nuclear agreement," Daimler said.

PSA and Renault had also moved quickly to sign new production deals with Iran after global sanctions were lifted in 2016 under the 2015 nuclear deal.

PSA signed production deals worth 700 million euros, while Renault announced a new plant investment to increase production capacity to 350,000 vehicles a year.

Both companies have said those projects have been suspended in light of the sanctions.

Total suspended its multibillion-dollar South Pars gas project after being unable to secure a waiver from the U.S. sanctions. It has until November 4 to wind down its Iran operations -- the deadline for when a second wave of U.S. sanctions targeting Iran's oil sector take effect.

Airbus suspended plane deliveries after getting orders for 98 planes from Iran. Only one A321 was delivered before the sanctions took effect, plus two A330s that were sold to a company that leased them to an Iranian customer.

A few major European companies still appear to be continuing operations in Iran or sitting on the fence.

Turboprop aircraft manufacturer ATR said this week that it delivered five more planes to IranAir shortly before Washington reimposed sanctions, but said it still faces the difficulty of getting U.S. permission to deliver another seven planes Iran has ordered.

European drugmakers Sanofi and Roche both appear to still be doing business in Iran in light of exemptions that were given to medicine under the original nuclear sanctions against Iran, though they said they were "closely monitoring" how the United States carries out its sanctions.

Food-maker Nestle said its Iran operations have been unaffected by the U.S. sanctions.

Nestle Iran, which is headquartered in Tehran, has two factories: one in Qazvin that produces infant cereals and infant formula, and a bottled water factory in Polour.

The company has 818 employees and imports a limited range of Nestle products from abroad, it said.

With reporting by AFP, dpa, AP, and Reuters