France, Germany and Britain have opened a new channel for non-dollar trade with Iran to avert US sanctions, although diplomats say it is unlikely to allow for the big transactions that Tehran says it needs to keep a nuclear deal afloat.
Washington’s major European allies opposed last year’s decision by US President Donald Trump to abandon the 2015 deal, under which international sanctions on Iran were lifted in return for Tehran accepting curbs on its nuclear programme.
Iran has threatened to pull out of the deal unless the European powers enable it to receive economic benefits. The Europeans have promised to help companies do business with Iran as long as it abides by the deal.
New US sanctions have largely succeeded in persuading European companies to abandon business with Iran, and Washington said on Thursday that it did not expect the EU effort, known as the Special Purpose Vehicle (SPV), to change that.
Iranian president Saturday said EU showed that it could act independent of the US, saluting INSTEX (Instrument in Support of Trade Exchanges) system that will ensure the maintenance of trade between Iran and EU.
Rouhani expressed satisfaction with EU’s INSTEX, founded to maintain trade operations with Iran, despite it came “late”. He asserted:
The false practices of the US are short-lived and won’t affect Iran’s relations with the world. It is of no doubt that we will overcome this period
The European trade vehicle was conceived as a way to help match Iranian oil and gas exports against purchases of EU goods. However, those ambitions have been toned down, with diplomats saying that, realistically, it will be used only for smaller trade, for example of humanitarian products or food.
“It won’t change things dramatically, but it’s an important political message to Iran to show that we are determined to save the JCPOA (Iran deal) and also to the United States to show we defend our interests despite their extraterritorial sanctions,” one European diplomat said.
The EU has spent months preparing the system and it will take several months more to become operational.
The Instrument In Support Of Trade Exchanges, or INSTEX, is registered in France and will be headed by German banker Per Fischer, a former Commerzbank director. The three European powers are shareholders and hope other states will join later, although a senior German official said this was not imminent.
Iranian Deputy Foreign Minister Abbas Araqchi said the mechanism was a good first step.
The European powers must now establish a budget for INSTEX and define its rules. Iran must also set up a mirror company.
“It seems that Iran should set up the same system inside Iran to organise rial transactions for Iranian companies,” Araqchi was quoted as saying by the semi-official Tasnim news agency.
The US Embassy in Germany said it did not expect INSTEX to blunt its effort to pile economic pressure on Tehran.