Tensions between the United States and the European Union over Iran soared into the open Tuesday after the Europeans announced plans for a legal framework to preserve business with Tehran and evade new US sanctions.

In rhetorical exchanges that brought back memories of the feud over the 2003 Iraq invasion, the United States denounced the Europeans who in turn made clear they would not back down on diplomacy.

Britain, France and Germany -- along with Russia and China -- had all pleaded unsuccessfully for President Donald Trump to remain in the six countries' 2015 accord with Iran on ending its nuclear program.

Full US sanctions are set to hit Iran in November and the country's economy is already taking a beating.

After talks Monday with Iranian Foreign Minister Mohammad Javad Zarif, EU foreign policy chief Federica Mogherini said the Europeans would set up a "legal entity" for businesses to transfer money without coming under Washington's scanner.

US Secretary of State Mike Pompeo, addressing a pressure group on the sidelines of annual UN meetings, said he was "disturbed and indeed deeply disappointed" by the EU announcement.

"This is one of the of the most counterproductive measures imaginable for regional and global peace and security," Pompeo said in a speech that was interrupted several times by anti-war protesters.

"By sustaining revenues to the regime, you are solidifying Iran's ranking as the number-one state sponsor of terror," said Pompeo, who quipped that Iran's "corrupt ayatollahs" and elite Revolutionary Guards had to be "laughing this morning."

- 'Hell to pay' -

John Bolton, Trump's hawkish national security adviser, mocked the European Union for its lack of detail on the planned mechanism.

"The European Union is strong on rhetoric and weak on follow-through," he told the United Against a Nuclear Iran campaign.

"We do not intend to allow our sanctions to be evaded by Europe or anybody else," he said.

Bolton also issued unsubtle warnings to Iran's leaders: "We are watching, and we will come after you."

"If you cross us, our allies or our partners, if you harm our citizens, if you continue to lie, cheat and deceive, there will be hell to pay."

Bolton has denied that the United States is seeking to overthrow the regime but before taking office had called for efforts to destabilize the country.

- Clash at UN -

The feud came as Trump and Iranian President Hassan Rouhani addressed the United Nations General Assembly, offering diametrically opposed messages.

Trump, while vowing that the United States is determined to act alone, urged all nations to isolate Iran -- whose arch-enemies Saudi Arabia and Israel are close to his administration.

Rouhani voiced regret that the deal, negotiated under former president Barack Obama, had become a "toy" of US domestic politics and accused Trump of seeking to overthrow his government.

French President Emmanuel Macron called for continued sales of oil by Iran, saying the flow would lower global prices and also benefit peace efforts.

"What will bring a real solution to the situation in Iran and what has already stabilized it? The law of the strongest? Pressure from only one side? No!" Macron said in his address.

He said the nuclear deal put Western powers in a stronger position to raise other concerns highlighted by Washington including Iran's support of militant groups Hamas and Hezbollah.

The Europeans highlight that UN inspectors have repeatedly found that Iran is in compliance with the 2015 deal, under which it scraps the bulk of its nuclear program in return for sanctions relief.

German Foreign Minister Heiko Maas told reporters there was "strong unity" with Iran on minimizing the impact of US sanctions.

Nonetheless, a number of prominent European businesses, including French energy giant Total and German automaker Daimler, have already said they will exit Iran to avoid US sanctions.

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