This week six European countries announced
they were joining Instex
, the special purpose vehicle set up - against US wishes - to permit (limited) trade with Iran following the Trump Administration’s withdrawal from the Iran nuclear deal
It’s an example of two important trends that remain under-discussed: one, growing calls for “European sovereignty
” across a range of policy areas (see previous coverage
of Macron on technological sovereignty); and, two, the difficulty of extraterritorial regulation in a multipolar world. Steve Randy Waldman wrote a prescient short essay
on the topic last year, which is worth revisiting. The key idea is that US withdrawal from the Iran deal gave its European partners both cover and strong incentives to push back on the US’s enforcement of financial regulation outside its borders.
We now have at least three global powers that are competing (with mixed success) to exercise extraterritorial control across different domains. The US wants, as Waldman notes, to enforce its rules wherever dollars are involved
; the EU, as it showed with GDPR, wants to be the global tech regulator of first
resort; and China wants to project its values
wherever it does business (and Singapore wants to enforce fake news flags
on social media!). This theme is just taking off; it’s going to vastly complicate national
regulatory debates, especially in tech, in the coming years.