The three European countries that have refused to leave the 2015 Iran deal, have officially set up a European mechanism to facilitate non-dollar trade with Iran and circumvent U.S. sanctions, two diplomats said on Thursday, Reuters reports.
The EU has been preparing the system, in effect a clearing house that avoids monetary transfers in dollars between the EU and Iran for months although it is unlikely to become operational for several months due to technical details.
German broadcaster NDR reported that the European Special Purpose Vehicle (SPV) would be named INSTEX-Instrument In Support Of Trade Exchanges.
The idea is for the SPV to help preserve the economic benefits for Iran derived from the curbs it placed on its nuclear program under a 2015 deal with world powers.
Europe has been keen to show good faith toward Iran since U.S. President Donald Trump withdrew from the deal last year.
The entity is not likely to revive trade with Iran to begin with as its focus will primarily be food, medicine and humanitarian, with transactions small. 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,” one European diplomat said.
France and Germany had taken joint responsibility for the SPV. A German banker would head up the vehicle, which would be based in France. Paris, London and Berlin will be shareholders and they hope other states will join.
Citing "official information", Iran's Ambassador to Britain Hamid Baeidinejad has also confirmed in his Twitter the new financial mechanism has been set up.
INSTEX Board members
Der Spiegel is reporting that it's received information that German banker Per Fischer has been chosen as head of the INSTEX, which is expected to be based in France. "69-year-old former manager of Commerzbank will head the Instex, the new special purpose vehicle intended to protect European companies with business relations with Iran from US sanctions," according to a report published by the German weekly on Thursday.
Former Commerzbank manager Per Fischer
"High-ranking diplomats from the three countries are represented on the Supervisory Board," writes the weekly. "Miguel Berger, Head of the Economic Department at the Federal Foreign Office will represent Germany; Maurice Gourdault-Montagne, former French Ambassador to Beijing will be France representative and for the United Kingdom, Sir Simon McDonald, Permanent Under Secretary and Head of the Diplomatic Service at the Foreign and Commonwealth Office," adds Der Spiegel. "Sir Simon is the most senior civil servant serving in the Foreign Office under Jeremy Hunt," according to the British daily The Sun.
Simon McDonald, a senior UK Foreign Office official (Photo: Alamy)
Maurice Gourdault-Montagne, former French Ambassador to China (Photo: South China Morning Post)