The SPV underscores the EU’s intent to stick to the 2015 Iran nuclear deal. At the onset, this alternative clearing house will focus on food, aid and humanitarian needs rather than on trade.
On Thursday, in a significant development, two diplomats disclosed, France, Germany, and Britain have officially set up a European mechanism to facilitate non-dollar trade with Iran.
Following the Trump Administration withdrawal from the landmark nuclear agreement and the reimposition of sanctions against Iran, the European Union has been preparing an alternative clearing house which avoids monetary transfers in dollars between the EU and Iran, thus creating an alternative channel for trade between the two.
The system is likely to become operational in several months.
In a report, German broadcaster NDR stated, the European Special Purpose Vehicle (SPV) would be named INSTEX-Instrument In Support Of Trade Exchanges.
Europe has shown good faith towards Iran since Trump withdrew the U.S. from the deal in 2018.
To begin with, this mechanism, will primarily focus on providing medicine, food and humanitarian aid and is unlikely to immediately revive trade in big numbers with Iran. Significantly, it will not be used for oil-related transactions that have been hit hard by U.S. sanctions.
“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 and also the United States to show we defend our interests despite their extraterritorial sanctions,” said an European diplomat.
Despite these good measures from the EU, relations between Tehran and the EU have taken a turn downwards following Iranian assassination plots on European soil. In a symbolic move, the EU added two Iranian individuals and an Iranian intelligence unit to the bloc’s terrorist list.
More importantly, EU member states are finalizing a joint statement on Iran which outlines show their desire to maintain the 2015 Iran nuclear deal while also raising concerns on its ballistic missile program and its regional policies.
France and Germany had taken joint responsibility for the SPV.
A German banker would head up the vehicle, which would be based in France.
France, Britain and Germany will be shareholders and they hope other states will join.