Page 18 - IRANRptJun19

Instex still not ready for sanctionable trades
France, Germany and the UK on January 31 announced the establishment of Instex to enable food and medicine transactions. Food and medicine trades with Iran are not subject to US sanctions. The EU has said it intends to add sanctionable trades to those that can be conducted via Instex, but little has been said publicly as to what extent and when such a move in defiance of Washington could be made.
The British, French and Germans addressed the difficulty of creating Instex by devising a model that shares the risk of US reprisals—the payment channel is based in Paris, it is managed by German banker Per Fischer, who was head of financial institutions at Commerzbank between 2003 and 2014, and it comes with a board that has UK decision-making participation.
But the US continues to treat Instex as a paper tiger.
On May 14, RFE/RL reported US special representative for Iran as saying of Instex that "the Iranians have not put in place the transparent financial system that allows this to be operational, so, I'm not sure it will ever get off the ground". "We don't see any corporate demand for it," Hook reportedly added.
Iranian ambassador to the UK Hamid Baeidinejad on May 14 reminded Europe in an interview with the Guardian that it has 60 days to ease Iranian oil sales in the face of the US sanctions designed to push them to zero or else see the end of the nuclear deal.
The accord was intended to lift heavy economic sanctions on Iran in return for it limiting its nuclear programme to agreed civil requirements and allowing international inspections. But since Donald Trump took the US out of the agreement in May last year, the threat of US secondary sanctions and the removal of all oil export waivers have, according to some analysts, cut Iranian oil exports by to 1m b/d or less from a peak of 2.8m b/d enjoyed while the nuclear deal still retained the US as a signatory. Exports could fall as low as 500,000 b/d in May.
Whether China, India and Turkey might disregard Washington’s sanctions threat and continue with major imports of Iranian oil is still not clear. The Chinese position might be tied to the outcome of its trade war talks with the US.
5.1.1 current account dynamics
Iran current account, USD mn
2011
2012
2013
2014
2015
2016
2017
2018
Balance of payments overall
-947
21,436
12,213
13,189
8,561
2,233
Current account balance
27,554
58,507
23,362
25,105
15,861
1,237
16,388
15,816
Current account balance: % of GDP
5.66
10.08
3.87
5.43
3.12
0.32
3.92
Current account: Goods
37,330
67,779
28,563
29,326
21,392
5,354
20,843
Current account: Exports
112,788
145,806
97,296
92,910
86,471
64,597
83,978
Current account: Imports
75,458
78,027
68,734
63,584
65,079
52,419
63,135
Current account: Services
-10,040
-9,771
-7,359
-6,820
-6,985
-4,472
-5,941
Current account: Income
79
93
1,649
2,034
943
241
928
18 IRAN Country Report June 2019 www.intellinews.com