Page 12 - IRANRptNov18

China refuses to go along
Rouhani welcomes EU’s SPV
substantially scale up its economic attack on Iran—designed to force the Iranians to the table to renegotiate their role in Middle East affairs—on November 5, on which date it wants to see a worldwide embargo in place on the country’s lifeline oil exports.
The damage already wrought by the US sanctions can be gauged by comparing the IMF’s latest economic outlook for Iran to the projection it gave prior to US President Donald Trump’s announcement of the sanctions in early May—at that point the IMF projected Iran's economy would grow by 4% in both 2018 and 2019.
Anticipated "reduced oil production" under the sanctions was key to the revised forecast, the IMF said.
Iranian crude exports reached a peak of around 2.5mn barrels per day after the multilateral sanctions were lifted in January 2016 after the signing of the nuclear deal by Iran and six major powers. But most estimates currently put them at around 500,000 b/d down in the run-up to the embargo deadline, after which they can be expected to fall much further. However, largest buyer of Iranian oil China has refused to go along with the requested boycott of Iran’s crude and second largest buyer India is pushing for at least temporary waivers to allow it to continue purchases.
Apart from the US, all the other nuclear deal signatories—Iran, Russia, China, Britain, Germany, and France—remain signed up to the accord under which Iran must comply with measures that bar any path it might take to develop a nuclear weapon.
Each of the signatories that objected to the US walking out of the deal, pointing out that the Iranians were in full compliance with it, have promised to make efforts to maintain trade and investment with Iran, although the results have been rather meagre so far and a great number of big foreign companies have exited the country fearing secondary US sanctions.
On October 3, Iranian President Hassan Rouhani welcomed an EU plan t o create a Special Purpose Vehicle (SPV) that will facilitate foreign trade with Iran while protecting traders from the secondary sanctions reach of the US. Brussels says the SPV m ight be ready for initial trading by early November. Analysts expect it will be mostly used by small and medium sized companies with less risky levels of exposure to the US economy and financial system.
European diplomats have described the SPV proposal as a means to create a sophisticated barter system, similar to one used by the Soviet Union during the Cold War. Iranian crude oil is to be exchanged for European goods without money changing hands. For example, Iran could ship oil to a German firm and the credit generated by that transaction could then be used to pay a French manufacturer for goods shipped the other way. There would be no transparency as to who is using the system.
In another reported move that would signal the EU’s commitment to protecting Iran from the Trump administration’s economic assault, Brussels has repeated a previous offer to open a representative office in Iran. The Austrian mission to Tehran is said to have announced that there are serious plans to move ahead with the project if it proved acceptable. Austria currently holds the EU’s rotating presidency.
12 IRAN Country Report November 2018 www.intellinews.com