(Bloomberg) -- Thousands of cows are stranded in the French countryside after President Donald Trump imposed new sanctions against Iran.
The livestock now grazing in Normandy were supposed to be shipped to Tehran slaughterhouses starting in the next few months as part of an export project led by local farmers and an Iranian company. Instead, the plan was put on hold after banks declined to handle payment from Iran for the cattle.
While the herds’ plight will have little impact on overall exports from Europe’s largest agricultural producer, it illustrates the far-reaching effects U.S. sanctions against Iran will have on global trade. After an earlier set of measures were eased in 2016, Iran reemerged as a hot spot for growth. Trade with Europe surged to more than $10 billion. French exports doubled last year to 1.5 billion euros ($1.7 billion).
The latest measures specifically ban trade of gold, metals and automobiles, but not livestock, while limits on Iranian access to dollars and additional sanctions on financial institutions starting in November will affect all sectors. European companies including Peugeot parent PSA Group, rival carmakers Renault SA and Daimler AG, and oil producer Total SA have all announced a halt to their activities in Iran.
“The cow market is symbolic,” French Senator Nathalie Goulet, who was an early backer of the project, said by phone. “In the long run, it could mean a loss of market share for Normandy and for France if Iranians get their supply somewhere else.”
Under the plan, French farmers were to eventually ship up to 20,000 calves annually to Iran. Agence-France Presse first reported that the program was suspended earlier this week. Agrial, a French cooperative with activities in the U.S., has withdrawn, Goulet said, adding that Iran’s Seamorgh Co. was the customer. Seamorgh didn’t immediately return an email seeking comment while a spokesman for Agrial declined to comment.
French farmers and the Normandy region were hoping the exports would generate more deals with Iran, such as exporting cattle feed and processed meat, said Anne-Marie Denis, president of the local agriculture lobby FDSEA, who oversaw the shipping of a first installment of 310 cows last year. At the time, payments went through, the head of the Normandy development agency, Alexandre Wahl, said by phone.
A French official said this week the country is seeking a U.S. waiver so that companies that are not hit by the sanctions can keep doing business. Such initiatives, echoed at the European level, have failed to prevent firms from pulling out of the country. For many, the prospect of losing a footing in the far-bigger U.S. market outweighs exchanges with Iran.
For Goulet, a system is needed to save export projects like the cows. A social media suggestion to use bitcoin payments is mostly in jest, she said, but “the point is that a solution needs to be found via an alternative banking system.”
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