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Eurasia
February 1, 2019 www.intellinews.com I Page 21
Europe inches forward with Instex plan to circumvent US sanctions on Iran
bne IntelliNews
It’s three months late, will at least initially only deal with food and medical products not af- fected by sanctions and has been dismissed by US officials as a “paper tiger” — but will the new non-dollar payments system announced by the UK, Germany and France on January 31 to allow European businesses to trade with Iran without falling foul of US sanctions have enough symbolic political value to give a shot in the arm to Tehran?
Establishing the payments system, a special purpose vehicle (SPV) named the Instrument
In Support Of Trade Exchanges (Instex), proved very challenging because a European Union member state willing to host it could not be found. The British, French and Germans overcame this difficulty by devising a model that shares the risk of US reprisals — the payment channel is based in Paris, is managed by a German banker —
Per Fischer, Head of Financial Institutions at Commerzbank between 2003 and 2014 — and comes with a board with UK decision-making participation.
Iran’s deputy foreign minister Abbas Araqchi said in response to the registering of Instex that the success of the mechanism would now depend on expert meetings that Iran is set to have with the Europeans, including between central banks. “It is a first step taken by the European side ... We hope it will cover all goods and items,” Araqchi told Iranian state TV.
But it is not just the Iranians who hope Instex — unlikely to become operational for several more
European Union High Representative for Foreign Affairs Federica Mogherini and Iranian Foreign Minister Mohammad Javad Zarif meet in Tehran in 2016.
months — will produce some tangible success. Europe too attaches real importance to expanding trade with Iran in the face of the US sanctions given that it intends to assert European economic sov- ereignty in response to the Trump administration’s unilateral foreign policy directed at the Iranians, policy it is seeking to impose on the Europeans. The EU, meanwhile, stung by the unilateralism
of the current White House, is studying plans to challenge dollar dominance in world trade.
After Instex was announced, EU foreign policy chief Federica Mogherini was quick out of the blocks to state that the plan is for the vehicle to eventually expand to allow European firms to trade more freely with Iran in a range of goods, in- cluding those subject to US sanctions. But Instex, as it stands, is a far cry from original purported plans to make it a clearinghouse for Iranian oil bartered in exchange for goods from Europe via ports in Italy and Greece. Oil, Iran’s big export earner, is for now entirely out of the equation.
“It won’t change things dramatically, but it’s an important political message to Iran to show that we are determined to save the JCPOA [Iran nu- clear deal] and also the United States to show we defend our interests despite their extraterritorial sanctions,” one European diplomat was quoted as saying by Reuters.
The news agency also cited Rob Malley, a former Middle East director at the US National Security Council under President Barack Obama and now at the International Crisis Group think tank, as