Trump and Merkel discuss Iran, Russia sanctions

Germany's chancellor Angela Merkel is the latest European leader to urge US president Donald Trump to remain part of the international agreement that lifted restrictions on Iran's crude exports in January 2016.

The two leaders also discussed ways to contain the fallout for European companies from the punitive measures the US has imposed on Russian aluminum giant Rusal.

Merkel, at a press briefing following her meeting with Trump at the White House, said that the Joint Comprehensive Plan of Action (JCPOA) must be preserved, while a new agreement can be negotiated to prevent Iran "from exerting geopolitical influence in Syria, Iraq and Lebanon."

Trump did not say whether he will make good on his promise to reimpose sanctions penalizing foreign countries, including EU member states, that buy Iranian crude and refined oil products unless the European powers can convince Tehran to revise the JCPOA by 12 May. Tehran opposes any changes to the agreement.

Germany together with France and the UK will continue negotiations over the future of the JCPOA, Merkel said. The repercussions for a US withdrawal are greater for Europe, she said: "Syria and Iran are right on our doorstep."

French president Emmanuel Macron earlier this week pitched an alternative proposal to Trump along the same lines as Merkel: preserve the JCPOA but negotiate a new agreement to address the complexity of challenges in the Middle East.

It is not clear whether the appeals will work. Macron has stated his belief that Trump may just withdraw from the JCPOA regardless of the outcome of US-EU negotiations.

Meanwhile, Trump's top civilian and military advisers have offered contradictory public remarks.

US secretary of state Mike Pompeo, sworn into the office yesterday, discussed JCPOA with his European counterparts in Brussels today. "There has been no decision made," Pompeo said. "Absent a substantial fix, absent overcoming the shortcomings, the flaws of the deal, (Trump) is unlikely to stay in that deal past this May."

But defense secretary Jim Mattis, speaking before the Senate Armed Services Committee yesterday, argued for remaining in the agreement while a new one is negotiated. "We would have to look at what degree of fix we anticipate are achievable, and then put that alongside America's broader interests and decide if it is worth (staying in the JCPOA) or not," Mattis said.

The US and the EU added another area of disagreement earlier this month after sanctions imposed by the US Treasury Department against Russian aluminum giant Rusal forced companies in Europe and elsewhere to review their supply chains and London-based metals exchange LME suspended the brand's listing.

"We have exchanged views on the secondary effects of the sanctions," Merkel said, but added that the US administration's hands may be tied as the penalties imposed on Rusal and other companies stem from a law Congress passed last year to penalize people believed to be close to Russian President Vladimir Putin for alleged interference in US elections.

The US Treasury has partially addressed concerns raised by Berlin and other European capitals, promising no interference with regular business transactions until 23 October to give foreign entities enough time to wind down business with Rusal, or for the company to sever ties with its billionaire owner Oleg Deripaska.

Rusal parent EN+ Group in a regulatory filing today said Deripaska, who separately appears on the US sanctions list, has "agreed in principle" to reduce his shareholding to below 50pc and to resign from its board of directors. But the Treasury on 23 April warned that it would only remove Rusal from the sanctions list if Deripaska divests his holdings in Rusal and relinquishes control.

Merkel and Trump also discussed an extension of steel and aluminum tariffs on imports from Europe. But neither would say whether Washington agreed to extend the tariff exemptions beyond 1 May.