Financial Times | Michael Peel and�Sam Fleming:�The EU faces a tough call on whether to hit back against a US squeeze on European companies� dealings with Iran � but history offers the bloc only small comfort that it can prevail.

John Bolton, Donald Trump�s national security adviser, warned at the weekend that European companies could be hit by US sanctions if they defy Washington�s call to sever commercial links with Tehran.

European diplomats and analysts say the 28-member bloc could deploy a mixture of retaliatory sanctions, a World Trade Organization complaint, and euro-denominated credit lines to limit exposure to financial curbs imposed by the US.

The stakes are much higher than the fortunes of few European multinationals and the growing � but still modest � trade between Iran and the EU.

�It�s not just about Iran and it�s not just about the business interests of some European companies,� Cornelius Adebahr, an Iran policy expert at the Carnegie Europe think-tank, said. �It�s about what the transatlantic relationship stands for.�

As Europe seeks to thrash out a response to the US�s actions on Iran, the French, German and British foreign ministers are due to meet Mohammad Javad Zarif, their Iranian counterpart, on Tuesday, with EU leaders holding an evening summit in Sofia the following night.

The threatened US measures jeopardise more than �20bn of annual EU-Iran trade and big contracts for companies including oil group Total and carmaker Renault. Even more importantly, they put at risk the economic benefits to Tehran that Europe sees as essential to keeping alive the multilateral 2015 nuclear deal. that Mr Trump abandoned last week.

The Trump administration�s tough line on Europe is all the more noteworthy because of the US president�s U-turn on Iran-related sanctions on China, a crucial US interlocutor in talks on trade and North Korea.

On Sunday, Mr Trump ordered the US commerce department to assist ZTE Corp, a Chinese telecoms group on which it imposed punitive measures last month because of equipment sales to Iran and North Korea.

The threat of blocking sanctions and a WTO complaint helped the EU prevail in previous battles in the 1990s over extraterritorial Washington sanctions intended to deter trade with and investment in Cuba, Iran and Libya.

It�s a fundamental and critical test of whether Europe is a global player or not Ellie Geranmayeh, European Council on Foreign Relations But times have changed. The links between European multinationals and the US financial system are much deeper today and Mr Trump�s administration has been reluctant to give Europe many special favours.

The blocking sanctions under EU consideration would allow European courts to ignore US judgments � and could even allow European businesses to launch countersuits. But European companies could still face big fines, asset seizures and even criminal charges in the US.

Complaints at the WTO also face obstacles, since cases at the body are time-consuming and many diplomats fear that Mr Trump is seeking to undermine the organisation , which he has attacked as �unfair� to the US.

Another problem facing the EU is sanctions that Washington has developed to target transactions in dollars, taking advantage of the greenback�s status as the world�s reserve currency. Over the past decade, the US has hugely stepped up efforts to prevent sanctioned groups from accessing dollar financing.

European diplomats are considering setting up statecredit lines in euros to circumvent the dollar finance restrictions � and to avoid relying on big European private sector banks that are already reluctant to do Iran-related business.

They have identified the European Investment Bank as a possible source of funding, although one European official said it was �way too early� to say whether the necessary approvals and capital for Iran business could be secured.

While Iran was added in March to a list of regions and countries potentially eligible for EIB activity, officials say that any commitments would need a sign-off from the EU�s main decision-making institutions. Iran would also need to show compliance with bank requirements, such as having adequate anti-money-laundering safeguards.

Iranian president Hassan Rouhani, right, with the head of French oil group Total Patrick Pouyanne at the signing of a major energy deal last year � AP Matthew Levitt, a fellow at the Washington Institute for Near East Policy, argued that the problems facing the EU strategies meant big European companies would tend to comply with sanctions as they �prioritise their American business over their Iranian business�.

The EU�s difficulties are tacitly recognised in the early public calls by the French government for sanctions �carve-outs� for European companies or specific projects.

So far, however, US officials have been adamant that European businesses must abide by the measures and wind down their Iran business within deadlines of 90 or 180 days.

Even a US agreement to grant exemptions to EU companies may not suit Europe. The continent�s diplomats look nervously at a separate high-profile dispute over US metal tariffs, in which the EU is being granted exemptions only on a month-by-month basis � an untenable arrangement for any business contemplating long-term dealings with Tehran.

If European companies are forced out of Iran, that could open up more opportunities for Chinese commerce to fill the gap � further damaging European efforts to resuscitate a nuclear deal they see as crucial to their security.

�The choice has been thrust into the lap of Europe and they need to make a decision,� said Ellie Geranmayeh, a Middle East specialist at the European Council on Foreign Relations think-tank. �It�s a fundamental and critical test of whether Europe is a global player or not.�