German businesses should immediately halt their operations in Iran following President Donald Trump's decision to pull out of the Iran nuclear deal, the US ambassador to Germany said Tuesday.

"As @realDonaldTrump said, US sanctions will target critical sectors of Iran's economy.

"German companies doing business in Iran should wind down operations immediately," tweeted newly-appointed Richard Grenell.

Germany is one of Iran's largest trading partners, with German exports hitting some 2.6 billion euros in 2016, up 26 percent on the previous year, according to the Ministry of Finance in Berlin.

Trump in Washington on Tuesday said he had consulted America's friends in the Middle East and concluded "that we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement."

Grenell, a strong backer of the US leader, assumed his role in Berlin on Tuesday just hours before Trump made the announcement which came despite appeals to save the deal from fellow signatories Germany, Britain and France.

Before starting his new role, Grenell previously complained that Germany "should have joined" US, British and French missile strikes against Syria last month over its suspected chemical weapons use.

Bitter pill for European leaders as Trump abandons Iran deal
Paris (AFP) May 8, 2018 - Donald Trump's decision to pull out of the landmark 2015 deal curbing Iran's nuclear programme is a bitter pill to swallow for European leaders and risks a creating a major transatlantic rift.

French President Emmanuel Macron, who has spent the past year cultivating the closest ties with Trump among EU leaders, made saving the Iran deal one of his priorities during his state visit to Washington last month.

German Chancellor Angela Merkel had also travelled to the US in late April and she worked closely with Macron and British Prime Minister Theresa May right up to the last minute.

In a joint statement issued shortly after Trump walked away from 2015 accord, they said they noted the decision with "regret and concern" but they said they would continue to uphold their commitments.

"Our governments remain committed to ensuring the agreement is upheld, and will work with all the remaining parties to the deal to ensure this remains the case," they said.

They noted that this included the "economic benefits to the Iranian people that are linked to the agreement," which means European firms would in theory continue to invest and operate there.

This would appear to set the three countries, all signatories along with Russia, China and the EU, on a direct collision course with Washington.

European leaders have clashed with the White House already on issues ranging from climate change to trade and Trump's decision to move the US embassy in Israel to Jerusalem.

Trump's hawkish National Security Advisor John Bolton said that European firms would have a "wind down" period to cancel any investments made in Iran under the terms of the accord.

"US sanctions will target critical sectors of Iran's economy. German companies doing business in Iran should wind down operations immediately," tweeted the US ambassador in Berlin, Richard Grenell.

Under the 2015 deal, Iran was meant to benefit from increased trade and contracts with foreign firms in exchange for accepting curbs on its nuclear activity and stringent monitoring.

Iran's deputy foreign minister Abbas Araghchi was invited to EU capital Brussels on Tuesday and the bloc's diplomatic chief Federica Mogherini said that the 28-member union was "determined to preserve" the deal.

- Hands tied? -

Attention will also now focus on whether a new, tougher agreement can be negotiated with Tehran, which Trump called for on Tuesday during his brief address to the nation.

France had already vowed to continue working towards a more comprehensive deal which takes into account concerns about Iran's ballistic missile development and its involvement in many of the crises roiling the Middle East.

Macron said Tuesday that he was prepared to "work collectively on a broader framework, covering nuclear activity, the post-2025 period, ballistic activity, and stability in the Middle-East, notably Syria, Yemen, and Iraq."

But Iran has ruled this out.

Amid the threat of new US sanctions, EU businesses will now have to decide whether to continue to work in the country if doing so puts their US operations at risk of huge fines.

"Companies are going to have to make a choice between their economic interests in Iran and their interests in the United States, and generally that choice is quite easy," a French diplomatic source told AFP before Trump's decision.

One option might be help for smaller European businesses who want to work with Iran and don't have any exposure to the US, or so-called "blocking regulations" that could exempt EU citizens and businesses from complying with the sanction laws.

"We are having conversations obviously and we are working on a number of proposals that could protect European companies and operators," an EU official said before the announcement.

- Tense situation -

European leaders say the stability of the entire Middle East is at stake, since allowing Tehran to resume building nuclear weapons would inevitably spark an arms race with its neighbours.

Iran has made no secret of its regional ambitions, intervening in Syria to back President Bashar Al-Assad as well as in Yemen to support rebels opposed to Tehran's arch-enemy Saudi Arabia.

Its more aggressive foreign activities have alarmed Israel, heightening tensions already inflamed by the US decision to recognise Jerusalem as the Israeli capital.

France, Germany and Britain called on Tehran to stick with the deal on Tuesday.

"We encourage Iran to show restraint in response to the decision by the US; Iran must continue to meet its own obligations under the deal," the three European leaders said in their statement.

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