Iran welcomes EU trade mechanism meant to skirt sanctions as ‘first step’

Iran welcomes EU trade mechanism meant to skirt sanctions as ‘first step’

Iranian deputy FM calls on Europeans to honor commitments made to Tehran under deal meant to curb its nuclear program

Iran's Deputy Foreign Minister Abbas Araghchi, who is also a senior nuclear negotiator, speaks with media in his press conference in Tehran, Iran, on January 15, 2017. (AP Photo/Vahid Salemi)
Iran's Deputy Foreign Minister Abbas Araghchi, who is also a senior nuclear negotiator, speaks with media in his press conference in Tehran, Iran, on January 15, 2017. (AP Photo/Vahid Salemi)

Tehran on Thursday cautiously welcomed as a “first step” the expected launch of an EU trade entity aimed at saving Iran’s nuclear deal by bypassing US sanctions.

The special payment mechanism “is the first step within the set of commitments the Europeans have made to Iran, which I hope will be fully implemented and not be incomplete,” said deputy foreign minister Abbas Araghchi, according to state news agency IRNA.

The formal announcement of the new payment vehicle is expected to be made on Thursday afternoon by the German, French and British foreign ministers in the Romanian capital, Bucharest. The three countries are the European signatories to the landmark deal that curbed Tehran’s nuclear ambitions in return for sanctions relief.

The entity, registered in France with German governance and finance from all three countries, will allow Iran to trade with EU companies despite Washington reimposing sanctions after US President Donald Trump pulled out of the 2015 accord.

US officials said they were following the situation but dismissed the idea that the new entity would have any impact on efforts to exert economic pressure on Tehran.

From left, European Union foreign policy chief Federica Mogherini, Iranian Foreign Minister Javad Zarif, French Foreign Minister Jean-Yves Le Drian, German Foreign Minister Heiko Maas and then British Foreign Secretary Boris Johnson at a meeting of the foreign ministers in Brussels, on May 15, 2018. (AP Photo/Olivier Matthys, Pool)

While the new institution, called INSTEX — short for Instrument in Support of Trade Exchanges — is a project of the three governments, it will receive the formal endorsement of all 28 EU members.

The company was registered in Paris on Tuesday with 3,000 euros capital and a supervisory board with members from France and Germany, and chaired by a Briton.

EU diplomatic chief Federica Mogherini, who has led the bloc’s efforts to save the Iran nuclear deal, said she welcomed the creation of INSTEX.

“This step… the establishment of the special purpose vehicle, is I believe the mechanism that will allow legitimate trade with Iran to continue as foreseen in the nuclear agreement. So full support from our side,” she told reporters.

Transatlantic discord

Washington has warned the EU against trying to sidestep its sanctions on Tehran, while the Europeans — along with the deal’s other signatories Russia and China — say Iran has not broken its side of the nuclear accord and should be allowed to trade.

Joseph Giordono-Scholz, spokesman for the US embassy in Berlin, said the United States was “closely following” reports on INSTEX but said it would not weaken its campaign against Tehran.

“As the President has made clear, entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the US financial system and the ability to do business with the United States or US companies,” he said.

“We do not expect the SPV will in any way impact our maximum economic pressure campaign.”

The reactor building at the Russian-built nuclear power plant in Bushehr, in southern Iran, as the first fuel is loaded, August 21, 2010. (Iran International Photo Agency via Getty Images/via JTA)

The UN atomic agency has certified Iran’s compliance with its obligations 13 times and even the head of the CIA said this week that Tehran was abiding by the accord — drawing a furious response from Trump.

The EU has growing concerns about Tehran’s ballistic missile program, as well as its human rights record, its interference in Middle East conflicts and recent attempted attacks against opposition groups in Europe.

Washington has warned it will vigorously pursue any company breaching its sanctions against the Islamic Republic and a number of major international corporations have already pulled out.

Mogherini insisted transatlantic ties were not threatened by the discord over Iran, saying Brussels was in regular contact with the US to discuss concerns about Tehran’s activities.

Belgium’s Foreign Minister Didier Reynders arrives for the 25th Organization for Security and Co-operation in Europe ministerial council meeting, in Milan, on December 6, 2018. (AP Photo/Antonio Calanni)

Belgian Foreign Minister Didier Reynders said that despite differences over the nuclear deal, Europe shared many of Washington’s concerns about Iran.

“It’s essential we show our American colleagues that we are going in the same direction as them on a series of issues such as ballistic missiles and Iran’s regional activities,” Reynders said as he arrived for the EU foreign ministers meeting.

On the INSTEX project, he said that “at the end of the day it will be companies that decide whether or not they want to work in Iran, bearing in mind the risk of American sanctions.”

The new European scheme was originally intended to allow Iran to sell oil to the EU on a barter basis but, with Europe buying very little Iranian crude, it is now aimed at small- and medium-sized companies.

“We’ll have to wait and see who uses it,” a European source said.

read more: