Europeans open new trade channel to Iran

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It is the most ambitious attempt by European allies to save the Iran nuclear deal from collapse following President Trump's decision to withdraw from it.

The new European scheme was originally meant to allow Iran to sell oil to the EU on a barter basis but, with Europe now buying very little Iranian oil, it is now aimed at small and medium-sized companies. In effect, INSTEX works as a barter arrangement operating outside of the US-dominated global financial system.

"It could turn into a pilot that the USA would find hard to target with political legitimacy given its humanitarian focus", he said.

A key question is whether the U.S. will see Instex, as initially constructed, as a legitimate target for sanctions by the United States treasury, since it has warned any European entity trading with Iran with usa connections or using dollars can be subject to punitive fines.

The revelation comes as the German broadcaster NDR, Germany, the United Kingdom, and France are ready to establish the European Channel for transactions with Iran.

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INSTEX, which is unlikely to be operational for another few months, is to have its headquarters in Paris and will be run by a German banker.

The UK Foreign Office said the Instrument for Supporting Trade Exchanges (INSTEX), was a "new mechanism for facilitating legitimate trade between European entities and Iran".

There are still technical details to be worked out following the entity's official registration.

The bloc has been working on this financial mechanism for months in an effort to reassure European companies. Despite the exemption, many pharmaceutical and agricultural companies stopped trading with Iran under the threat of secondary sanctions.

The US hasn't reacted to the new payment channel but, last November, Secretary of State Mike Pompeo warned of "swift punishment" for other countries doing business with Iran.

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The SPV will facilitate legitimate trade under European and worldwide law.

In 2015, Iran accepted curbs on its nuclear programme in return for the lifting of sanctions.

Initially, it is likely to ease some of Iran's foreign exchange problems. Washington then reintroduced its sanctions against Iran.

The US state department said it would fail, however. Washington also uses its global clout to penalize non-US banks and companies that do business with Pyongyang. Since the start of the Syrian civil war in 2011, Tehran has poured a reported $6 billion into propping up president Bashar Assad's government. All property and assets of the Syrian government in the U.S. have been frozen. Unlike many other news organizations, we have not put up a paywall. The comprehensive sanctions list includes goods from the Russian-annexed region, such as wine. The Europeans have promised to help companies do business with Iran as long as it abides by the deal. He went on to note that by creating this tool, the European Union states had confirmed their intent to counter U.S. actions aimed at derailing the Iran nuclear deal. Iranian President Hassan Rouhani, in particular, is under pressure domestically to get something out of the deal, which hard-liners at home opposed.

How America will respond remains in question. Oil trade with China has dropped off in recent months, reaching a three-year low.

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Iran is also looking to Russian Federation and China, the other signatories to the nuclear accord, to maintain trade flows in defiance of the United States.