US President Donald Trump has raised the pressure on Iran on the day Tehran said it was suspending some commitments to a landmark nuclear agreement.
Mr Trump signed an executive order imposing sanctions on Iran’s metals industry – its second biggest export earner after oil.
But he also said he hoped to meet Iran’s leaders to work out a deal.
Iran’s move to curb compliance with the 2015 international deal is an apparent bid to thwart the US sanctions policy.
The UK, France and Germany – the Western parties to the agreement – warned Iran not to abandon the accord.
They criticised Iran’s “unwelcome” step and said they could only continue supporting the deal if Iran stuck to its commitments.
The 2015 accord was intended to curb Iran’s nuclear ambitions in return for relief from sanctions.
What has Mr Trump said?
It was mostly stick, although there was some carrot, and it came on the anniversary of the US pulling out of the 2015 international agreement, which Mr Trump has always fiercely opposed.
The president said: “Today’s action targets Iran’s revenue from the export of industrial metals – 10% of its export economy – and puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated.”
He added: “Tehran can expect further actions unless it fundamentally alters its conduct.”
The sanctions cover iron, steel, aluminium and copper.
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The US has already set in place a strategy on Iran’s oil exports which it says is intended to bring a halt to all sales worldwide.
But Mr Trump also said he was open to talks.
“I look forward to someday meeting with the leaders of Iran in order to work out an agreement and, very importantly, taking steps to give Iran the future it deserves,” he said.
The US has recently said there have been threats to US forces and their allies from Iran, but has given few details. A US aircraft carrier has been deployed to the Gulf and Secretary of State Mike Pompeo has made an unscheduled visit to Iraq.
What did Iran do over the deal and why?
It suspended two parts of the deal, known as the Joint Comprehensive Plan of Action (JCPOA), namely the sale of surplus enriched uranium and heavy water.
Under the deal, Iran is required to sell its surplus enriched uranium – which can be used in the manufacture of nuclear weapons – abroad, rather than keep it.
The idea appears to be to get the other parties to the deal, who also include China and Russia, to stand up to the US sanctions.
Iran’s economy has been badly hit by the US policy. The value of Iran’s currency has dropped to record lows and its annual inflation rate has quadrupled.
Iran said it would resume the sales after 60 days if the parties observed financial and oil commitments and opposed the sanctions.
But it also said it still supported the agreement.
What was the response of those in the deal?
UK Foreign Secretary Jeremy Hunt said Iran’s latest step was “unwelcome” and he urged Iran “not to take further escalatory steps” and to “stand by its commitments”.
He added: “Should Iran cease to observe its nuclear commitments there will of course be consequences.”
But he also said he continued to support the deal.
German Foreign Minister Heiko Maas said its position was to “stick by the agreement”, calling it crucial for European security.
French Defence Minister Florence Parly told French media that the European powers were doing everything they could to keep the deal alive but there would be consequences and possibly sanctions if the deal was not adhered to.
Russian Foreign Minister Sergei Lavrov urged all of the remaining parties to fulfil their obligations, and said that Western participants were trying to “divert attention” from their inability to do so.
China said it “resolutely opposes” unilateral US sanctions against Iran and called for strengthened dialogue.
In Washington, special assistant to the president, Tim Morrison, said Iran’s move was “nothing less than nuclear blackmail of Europe” and urged Europeans not to back the Instex, or special purpose vehicle, devised to trade with Iran.
What is Instex?
It’s a new payments mechanism, set up in January by the UK, France and Germany to allow businesses to trade with Iran without being subject to sanctions.
It is supposed to focus on “legitimate trade” in goods “where the immediate need of the Iranian people is greatest”, for example food, pharmaceutical products and consumer goods not subject to sanctions.
Oil, Iran’s main source of foreign exchange, is at the moment not covered and Tehran wants the Europeans to give the system more bite.
But that could put traders at loggerheads with the US sanctions.
Mr Morrison said: “If you are a bank, an investor, an insurer or other business in Europe you should know that getting involved in the special purpose vehicle is a very poor business decision.”
Mr Pompeo said the terms of Instex were “unobjectionable” but any transactions beyond them could draw sanctions.
Huge dilemma for Europeans
Iran is seeking to strike a difficult balance: pushing back against some of the restrictions imposed by the JCPOA, while not doing so much as to withdraw from it altogether.
This is an alarm signal but also a warning. Iran is facing growing pain from re-imposed US sanctions.
It wants the Europeans to take urgent practical steps to provide some relief. And if relief does not come, then Iran may well have to re-consider its overall adherence to the JCPOA – which the US abandoned a year ago.
This presents the Europeans with a huge dilemma. They are caught between the Iranians and the Trump administration. Can they continue to back the agreement if Iran is not fully complying with its terms?
The US is likely to insist that there can be no middle way. Iran is either honouring the terms of the JCPOA or it is not.