EU Busts Iran Sanctions. Dollar No Longer Reserve for Oil Trades
In a surprise move, the EU special purpose vehicle for trade with Iran (INSTEX) exercised its first trade today. The body was set up to facilitate exports of Iranian oil without U.S. dollars, avoiding a sanctions regime imposed unilaterally by the U.S.
Instex is now operational despite U.S. threats to European banks and officials of reprisal sanctions if they violated Iran sanctions.
Bloomberg had reported on May 7 the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, issued a warning letter that Instex and anyone associated with it could be barred from the U.S. financial system if it goes into effect.
In defiance of U.S. pressure, Instex was set up by EU diplomats in January as a means to prevent total collapse of the Iranian nuclear deal, officially called the Joint Comprehensive Plan of Action (JCPOA). The first official trades occurred today, in the shadow of the Group of 20 Summit meeting. https://www.thenational.ae/world/europe/eu-claims-iran-deal-held-togethe...
A senior EU diplomat has said the first transactions were being made by a special purpose vehicle for trade with Iran at a meeting of the remaining members of the 2015 nuclear deal in Vienna.
Friday’s meeting in Vienna featured “constructive discussions,” Helga Schmid, the head of the EU diplomatic service said, confirming the entity, named Instex, was making its first transactions.
“INSTEX now operational, first transactions being processed and more EU Members States to join. Good progress on Arak and Fordow [fuel enrichment] projects,” she posted.
The Instrument in Support of Trade Exchanges (Instex) is designed to facilitate trade of essential goods, such as food and medicine, mainly from the EU to Iran. A Chinese official said Beijing was open to using the facility.
The platform has been set up in France, with a German managing director in a coordinated European effort to counterbalance the US economic power displayed by its sanctions policy.
President Donald Trump last year pulled out of the Iranian nuclear deal, officially called the Joint Comprehensive Plan of Action (JCPOA), which curbed Iran’s nuclear activities in return for the lifting of sanctions.
According to today's report:
As the talks kicked off on Friday, seven EU nations expressed support for Instex and the JCPOA, asking Iran "to abide by and fully respect the terms and provisions of the nuclear agreement".
"We are working with France, Germany and the United Kingdom, as well as with the European External Action Service and the European Commission, to establish channels to facilitate legitimate trade and financial operations with Iran, one of the foremost of these initiatives being the establishment of Instrument in Support of Trade Exchanges," read the statement from Austria, Belgium, Finland, the Netherlands, Slovenia, Spain and Sweden.
Whether the declaration of support and first tranche of transactions will be enough to keep Iran committed to the 2015 nuclear deal is still in question.