Iran urges European oil purchase, credit lines within INSTEX

Central Bank of Iran (CBI) says Europe should stop accusing Iran of not setting up INSTEX mirror company and start action by buying Iranian crude and giving credit line to European exporters for starting trade with Iran.

14 May 2019
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Central Bank of Iran (CBI) urges Europe to start trade exchange through INSTEX by purchasing Iranian oil and opening credit lines for European exporters, saying that ball is in their court now.

“The most simple solution to operationalise INSTEX and STFI (SATMA) mechanisms is that European companies and entities buy Iranian crude and that Europe open a credit line for its exporters to start exporting to Iran,” CBI Governor Abdolnaser Hemmati wrote in his Instagram account on Monday night.

Tehran created the private company Special Trade and Financing Instrument between Iran and Europe (STFI), also called SATMA in Persian, back in March, nearly two months after Germany, France and the UK, also called the E3, announced creation of the Instrument in Support of Trade Exchanges (INSTEX) on the last day of January on the sidelines of a European Union summit in the Romanian capital Bucharest.

“More than a year ago, Europe was seeking a financial mechanism for trade with Iran that was finally introduced three months ago,” added Hemmati in his post.

“It’s nearly two months that a parallel mechanism to INSTEX, Special Trade and Financing Instrument between Iran and Europe (STFI) has been set up in Tehran and its managers were introduced to the Europeans,” Iran’s chief banker noted.

Ali Asghar Nouri, a former Iranian private banker, has been chosen as the president of the STFI for a period of two years. His private company, registered at Davudieh neighbourhood in Tehran very close to the CBI HQ, is comprised of a four-member board of directors. 

Ali Asghar Nouri, former Iran Zamin banker. ASRETEBAR 

The European Special Purpose Vehicle (SPV) is presided by former German banker Per Fischer who works with a three-member supervisory board from the European trio.

Hemmati proposed that the E3 “test their ability” by exporting vital goods and pharmaceuticals “if they are concerned about the kind of exported goods to Iran”. “It can be said that now the ball is in Europe’s court”.    

The Europeans have reiterated that the financial channel will be limited in its first phase to the export of humanitarian goods such as medicine, medica equipments and agrifoods.  

Last Wednesday, US Secretary of State Mike Pompeo had warned of sanctions if the vehicle engages in transaction of sanctioned goods with Iran.

“When transactions move beyond that, it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction,” said Pompeo during a press conference with his British counterpart Jeremy Hunt last Wednesday.

The CBI governor urged Europe to stop using “repeated and worn out sentences” about “seeking a financial mechanism”.

His comments were echoed on Saturday by STFI CEO Ali Asghar Nouri who stressed that “the ball is now in Europe’s court because “Tehran has done all it could to help start commercial exchanges”.  

“We have set up the mirror company for INSTEX. Now, the ball is in Europe’s court to make this mechanism functional,” Nouri was cited as saying by the state news agency IRNA on Saturday.

He stressed that the company he is presiding, called SATMA in Persian, “has no problem in carrying out the procedures that must be done in Iran” in case Europe is prepared to do the same “today”.

He made the remarks after German foreign ministry spokesman Maria Adebahr said the European payment channel has not been operational yet because “it needs a mirror structure in Iran, which must be realized by the Iranian side”.

STFI was registered in the Iranian capital on 22 April and its president and board members were appointed.

Nouri, a former private banker, had said on May 6 that his company is prepared to realise the first “coordinated financial transaction” with Europe.

Earlier in April, Nouri’s counterpart German banker Per Fischer noted that Paris-based INSTEX is also ready for first trade exchange with Iran in “shortest time possible”.

“We established the private company Special Instrument for Trade and Financing between Iran and Europe (STFI) in a bid to help the European side,” its president added.

“This company is exactly the same as INSTEX and if Europe is ready today, we have no problem to carry out the procedures that must be realised in Iran,” Nouri said in the interview.

STFI CEO called on Germany and the other two European signatories to the Joint Comprehensive Plan of Action (JCPOA) not to criticise Iran because “the other side hasn’t fulfilled its commitments”.

First Iran-Europe trade exchange within next weeks

As Iran’s patience with Europe’s “inaction” is “wearing thin”, Brussels is trying to find ways to carry out trade with Iran through INSTEX and STFI to keep Iran content economically.

On Monday night, European Union’s Foreign Policy Chief Federica Mogherini held talks with the E3 foreign ministers in a bid to explore options how to make the INSTEX operational soon. The four have discussed possibilities that the mechanism start work in the next few weeks.

Federical Mogherini, left, poses for photo with French, German and British FMs Jean-Yves Le Drian, Heiko Maas and Jeremy Hunt after EU, E3 talks on Iran in Brussels. Photo courtesy of EU Spokeswoman Maja Kocijančič in Twitter @MajaEUspox 

“The foreign ministers of France, Germany and the UK and Mogherini also met to discuss the ways in which the EU can further advance on the operationalisation of Instex to have first transactions in the next few weeks hopefully,” wrote European External Action Service (EEAS), the 28-member block’s foreign ministry.  

Watch video: Mogherini says she hopes first transactions with Iran through INSTEX in the next few weeks (European External Action Service Twitter @eu_eeas

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