(March 4): Spanish Prime Minister Pedro Sánchez said he will not yield to threats over his objections to the US and Israeli war in Iran, extending a dispute with US President Donald Trump, who threatened to cut off trade with the Mediterranean country.
“We are not going to be complicit in something that is harmful to the world and contrary to our values and interests simply out of fear of someone’s retaliation,” Sánchez said in a speech Wednesday (March 4).
Trump on Tuesday said the US would “cut off all trade with Spain", criticising the country for denying access to its military bases for the American bombing campaign against Iran.
Spain’s main equities benchmark the Ibex 35 was little changed as of 10.26am in Madrid, the worst-performing country index among major European markets on the day. Spanish bonds traded lower alongside peripheral peers, widening their spread over safer German counterparts two basis points to 47 basis points, the most since December.
Trump didn’t explain how he planned to cut off trade with Spain, which could prove difficult since the US has a trading relationship with the broader European Union. Later, he suggested he had the power to impose a full embargo on goods from the country, though he did not indicate explicitly that he planned to do so.
See also: Europe’s economy can ride out Iran war — if it’s over in a month
The European Commission, which handles trade matters for the EU, said it expects the US to honour commitments made in a trade deal signed last year, adding that it will “stand ready to act if necessary to safeguard EU interests".
Referring to the conflict in Iran, Sánchez said the government is considering an aid package to Spanish businesses and workers in order to “mitigate the economic impacts of this conflict". Spain runs a €13.4 billion trade deficit with the US. Total bilateral trade amounts to €46.8 billion.
On Sunday, Sánchez said the US and Israeli operation amounted to an “unjustified, dangerous military intervention outside international law". The government in Madrid warned Washington it cannot use the two military bases in the country’s south to support the operation, arguing that such involvement would fall outside the treaty governing the facilities.
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Trump also criticised the UK for blocking him from using a military base on the island of Diego Garcia to carry out strikes on Iran, saying he was “surprised” while stopping short of making a similar trade threat.
“This is not the age of Churchill,” Trump said from the White House. “I will say, the UK has been very, very uncooperative with that stupid island that they have.”
Trump has also expressed frustration with Sánchez for rebuffing his call on Nato allies to raise defence spending to 5% of gross domestic product. Last October, the US president said that Spain should receive a “trade punishment” over the disagreement.
Sánchez said on Wednesday that the US goals were unclear and that Spain needs to be ready for a long war with many casualties and severe economic consequences.
“You can not answer one illegality with another — that’s how disasters for humanity start,” Sánchez said. “The government demands a ceasefire and a diplomatic resolution of the war.”
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