The Trump administration is reportedly considering sanctions against an Iranian financial body set up to enable humanitarian trade with Europe, a measure that would likely end any possibility of European countries maintaining economic and humanitarian trade with Tehran.
The new sanctions would focus on the Special Trade and Finance Institute, which Iran set up to work opposite INSTEX, a European system created to enable continued humanitarian trade with Iran despite existing US sanctions, Bloomberg reported Monday.
Britain, France and German have been striving to maintain some level of economic dealings with Iran in order to keep alive a 2015 nuclear pact that has faltered since the US pulled out last year and then reimposed sanctions on Iran.
A US official said the STFI is considered part of Iran’s central bank, which is already targeted by US sanctions. Washington also accuses the bank of not having applied international measures against terrorism financing and money laundering, noted the official, who spoke to Bloomberg on condition of anonymity.
European nations had pledged to create the INSTEX mechanism, which would allow Iran to continue to trade for humanitarian goods despite American sanctions. However, that program has yet to really take off, something Iran’s foreign ministry spokesman noted on Monday.
“We haven’t put much hope in INSTEX,” spokesman Abbas Mousavi said, according to Iranian state television. “If INSTEX was going to help us, it would have done so already.”
Iran has said it will only continue to uphold the 2015 nuclear pact, known as the Joint Comprehensive Plan of Action, if European countries are able to provide enough trade incentives for it to do so.
US President Donald Trump wants to negotiate stiffer terms for the JCPOA, which saw previous sanctions lifted from Iran in return for it dismantling the weapons-capable aspects of its nuclear program.
Although the existing US sanctions allow for humanitarian trade with Iran, European countries wanted INSTEX as additional protection against being punished by the US for trading with Tehran.
Europe says INSTEX is needed to keep Iran in the nuclear deal, which it insists has been effective in its stated goal of preventing Iran from obtaining nuclear weapons. Iran has set an early July deadline, at which point it says that if it does not see more advantages to staying in the accord, it will abandon some of its restrictions.
However, opponents to INSTEX in Washington are concerned it could eventually become a means to undermine the pressure of US sanctions on Iran, the report said. Iran’s economy has spiraled as it has struggled to cope with the existing sanctions, which particularly target its oil industry.
German Foreign Minister Heiko Maas traveled this week to Iran, where he met his Iranian counterpart, Mohammad Javad Zarif.
“Mr. Trump himself has announced that the US has launched an economic war against Iran,” Zarif said at joint press conference. “The only solution for reducing tensions in this region is stopping that economic war.”
Maas insisted his country and other European nations want to find a way to salvage the deal, but he acknowledged there were limits.
“We won’t be able to do miracles, but we are trying as best as we can to do prevent its failure,” he said.
However, Europe has yet to offer Iran a way to get around the newly imposed US sanctions. Meanwhile, a July 7 deadline — imposed by Iran — looms for Europe to find a way to save the unraveling deal. Otherwise, Iran has warned it will resume enriching uranium closer to weapons-grade levels.