France, Germany say INSTEX close to first deal in days

The two main European countries behind the European payment mechanism say they are working at top speed to bring the channel online very soon, preferrably before this Sunday when Iran will announce more commitments reduction.

6 July 2019
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The two main European countries behind the European payment mechanism say they are working at top speed to bring the channel online very soon, preferrably before this Sunday when Iran will announce more commitments reduction.

French Finance and Economy Minister Bruno Le Maire leaves after a meeting at the Elysee Palace in Paris, France, March 26, 2019. REUTERS/Philippe Wojazer

French Finance Minister Bruno Le Maire said on Thursday he hoped a special trade channel set up with Iran would complete a first, limited transaction in the coming days, Reuters reports. 

“We want INSTEX to enter into force in a few days, and I hope that we will be able to operate in a few days. I hope the first transaction will be completed in a few days,” Le Maire told journalists at a meeting in Poland.

Set up by France, Britain and Germany, INSTEX is a barter trade mechanism that aims to avoid direct financial transfers by offsetting balances between importers and exporters on the European side. 

The Instrument in Support of Trade Exchanges (INSTEX) is aimed at making it possible for trade between European Union (EU) members and Iran to continue in the face of stiff US sanctions since Washington quit a 2015 nuclear accord between Tehran and world powers last year.

“The first transaction will be a limited one, but this is a starting point and we expect INSTEX to be an efficient tool,” Le Maire added.

Iran has said it wants to keep the nuclear deal alive but must receive promised economic benefits. On Monday, it said it had amassed more low-enriched uranium than permitted, and it has said it will announce further measures on July 7.

France’s foreign ministry said on Wednesday that INSTEX would become operational based on Iran’s “full compliance with its JCPOA (Iran deal) commitments.”

“We aren’t going to press the yes button if there are doubts about its compliance,” said one European diplomat, according to Reuters.

Two other European diplomats said that while possible transactions had been identified, it was too early to move ahead as due diligence was still underway and that as of yet the Iranian side had still to complete a mirror company that would facilitate the process.

However, the Europeans have created an advanced payment system that could enable some small transactions soon.

Iran has created and registered a counterparty to INSTEX, called Special Trade and Financing Instrument between Iran and Europe (STFI).

The system initially will only deal in products such as pharmaceuticals and foods, which are not subject to US sanctions.

Iranian officials have repeatedly said INSTEX must include oil sales or provide substantial credit facilities for it to be beneficial.

Germany, the other party to both the JCPOA and INSTEX, said on Friday that it’s working hard to reach the point where the first transactions can be carried out under the INSTEX, a German Foreign Ministry spokesman said on Friday.

Spokesman Rainer Breul said European industry had a great interest in the system being brought online, which will make it possible for trade between EU members and Iran to continue despite stiff US sanctions in place since Washington quit a 2015 nuclear accord.

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