Germany, France and the United Kingdom have put in place a system of circumventing US sanctions in trade with Iran. At a meeting of EU foreign ministers in Bucharest on Thursday it was announced that a new agency will be created through which transactions between European and Iranian companies will be carried out if private banks, fearing US sanctions, refuse to handle them.
The ‘special purpose vehicle’ will operate as a clearing house and allow Iran to continue to sell oil through this channel in exchange for other products or services necessary for its economy. According to the scheme, an Iranian company will be able to sell products to a European company and thus be granted credit. This can then be used for the acquisition of other goods. Initially, it would be mainly food products and drugs, these two sectors having been particularly affected by the sanctions imposed by Washington.
However, the scope of the mechanism, similar to that of a clearing house, will likely be limited to smaller European companies, given that larger companies, keen to preserve their access to the US market, have already withdrawn from Iran.
The entity – called Instex (Instrument in Support of Trade Exchanges) – will be registered in France and will have a German management. Its first funds will be provided by France, Germany and the United Kingdom, the three EU countries that signed the nuclear agreement with Tehran in 2015. The other signatories are China, Russia and the United States. However President Trump has withdrawn the United States from the agreement and imposed new sanctions on Iran.
As far as the EU is concerned Iran has so far fulfilled all the conditions of the agreement, which has been confirmed 13 times following the results of inspections by the International Atomic Energy Agency (IAEA).