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Global Europe and strategic sovereignty | 169 European banks and firms fear the enforcement mechanisms managed by the US Office of Foreign Assets Control (OFAC). This concern of European companies is especially acute at times when OFAC, as part of its strategic choice, is increasingly focusing on foreign agents: between 2003 and 2018, OFAC enforcement actions against foreign entities increased from 4 per cent to 43 per cent. In response, the EU has taken a number of actions to tackle the extraterritorial effects of US sanctions, including in the recent case of US sanctions against Iran (Early and Preble 2020; Portela 2021). Ihis time the European Commission reactivated its Blocking Statute of 1996 to mitigate impact by allowing EU operators to recover their related losses and damages, and nullifying the effects within the Union of any related foreign court rulings (European Commission 2018). Nevertheless, EU firms have been facing the hard choice between excluding themselves from US markets, or breaching EU law. At the same time, in 2019, France, Germany, and the UK established the Instrument in Support of Trade Exchanges (INSTEX), later joined by a number of other European states, which kept open a channel for transactions with Iran. Still, while the first transaction was successfully made in early 2020, the mitigating impact of INSTEX has proven to be modest after all, given that EU firms seek to avoid OFAC fines. As Pierre Vimont, former SecretaryGeneral of the European External Action Service (EEAS), emphasised, “INSTEX was never thought of as economically efficient” but rather as “a political answer to underline to Iran that we ... are still committed to the nuclear deal” (Portela 2021, 4). In the light of this geopolitical factor, it is not surprising that the new European Commission, elected in 2019, made some important decisions to tackle extraterritorial sanctions. Its ambitions to strengthen the Unions global economic posture has also been demonstrated by moving the preparation of EU sanctions from the Service for Foreign Policy Instruments (FPI) to the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) at the European Commission (Dall 2019). As DG FISMA is also responsible for fostering the international role of the euro in commercial transactions, this move is expected to mitigate the impact of extraterritorial sanctions on EU operators (European Commission 2021). There are also a number of proposals floated by EU policymakers on how to deal with extraterritorial sanctions in the future. Apart from the need to reform the Union's Blocking Statute and strengthen the role of the euro in global commercial transactions, there is an initiative to create, under the supervision of the European Commission, a compensation fund for EU companies and 6 One consequence ofthis is that banks, even ifthey could accept certain transactions, often over-comply with the sanctions in place and reject transactions that would otherwise be legally possible.
