The European Union’s leading countries have finally set up a new channel for payments to Iran, according to reports. The move, which will reportedly be announced later on Thursday, would almost certainly infuriate the U.S., as it would allow the bypassing of American sanctions on Iran.
The EU has always been clear that it would continue trading with Iran despite U.S. sanctions on Iranian oil exports, and the country’s automotive, commodities, shipping and banking sectors.
The issue is dealing with Iranian businesses without exposing banks to U.S. punishments. The Belgium-based SWIFT financial messaging service also, under U.S. pressure, agreed in November to cut off the access of Iranian banks.
So the Europeans have for months been trying to work out a “special purpose vehicle” to allow the continuation of trade with Iran. On Thursday morning, the German broadcaster NDR reported that the vehicle was finally here, in the form of the Instrument in Support of Trade Exchanges, or INSTEX.
INSTEX will reportedly be run by the Germans, the French and the British. It will apparently be based in Paris, have a German banking expert at the helm, and a Brit chairing its supervisory board. Other European countries are free to hop on board—the mechanism will take some weeks to become operational.
According to Deutsche Welle, INSTEX will at first only be used for selling food, medicine and medical devices in Iran.
As NDR reported, the Europeans are still keen on the nuclear agreement that stops Iran from developing nuclear weapons, and that President Donald Trump abandoned last year. German government officials also told the outlet that they were not ignoring Iran’s human rights issues, nor its intelligence activities in Europe.
Also Thursday, India said it was seeking an extension of the temporary waiver, granted to it by the U.S., that allows it to continue importing Iranian crude oil.