Three European signatories to the 2015 Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA) have officially registered and put in place INSTEX, the special purpose vehicle for trade with Iran, according to a statement by France, Germany and the United Kingdom.
“France, Germany and the United Kingdom, in accordance with their resolute commitment and continued efforts to preserve the Joint Comprehensive Plan of Action (JCPOA) endorsed by United Nations Security Council resolution 2231, announce the creation of INSTEX SAS (Instrument for Supporting Trade Exchanges), a Special Purpose Vehicle aimed at facilitating legitimate trade between European economic operators and Iran,” a statement published on Thursday says.
The three countries have conditioned the existence of such mechanism and “their efforts to preserve the economic provisions of the JCPOA” on “Iran’s full implementation of its nuclear-related commitments.”
The Special Purpose Vehicle (SPV) will facilitate commercial export of European “pharmaceutical, medical devices and agri-food goods,” “sectors most essential to the Iranian population,” according to the document.
Watch video: how INSTEX works (source: French Ministry for Europe and Foreign Affairs Twitter)
Paris, Berlin and London have stressed that the “INSTEX aims in the long term to be open to economic operators from third countries who wish to trade with Iran and the E3 continue to explore how to achieve this objective.”
The statement welcomes the INSTEX as “a major first step taken by E3 countries” and says the channel will become operational when the three european states negotiate with both the body as well as Iran to see how the mechanism can work as well as create a corresponding entity in Tehran.
The three European capitals go on to call on Iran to “swiftly implement all elements of Financial Action Task Force (FATF) action plan” as the channel will work under international standards of combating “money laundering and finance of terrorism (AML/CFT) as well as EU and UN sanctions.”
Iran has approved two of the four FATF action plans, that is, combating money laundering and terrorism financing.
The financial mechanism is expected to be chaired by former German banker Per Fischer and based at French Ministry for Economy and Finance.
Meanwhile, European Union’s foreign policy chief Federica Mogherini welcome the “registration of INSTEX”, insisting that it can be later opened to third countries.
“This is a matter of respecting international agreements and of advancing our shared regional and international security,’ added Mogherini, referring to the fact that US unilaterally withdrew from nuclear deal and restored sanctions.
Before attending a European Union summit in Bucharest, she had stressed the Union's full support for the implementation of the JCPOA.
Watch video: EU foreign policy cheif Federica Mogherini discusses Iran nuclear deal (source: European External Action Service Twitter)
Also Germany’s BGA trade association has defended the mechanism, calling it “legitimate” that “ sends an important signal of Europe’s reliability as a trade partner.”
Iran has welcomed the European move, saying it’s ready for “constructive engagement with Europe”. “Iran welcomes INSTEXT-a long overdue firstep-in E3 implementation of May 2018 commitments to save the JCPOA by ensuring dividends for Iranians after US’ illegal reimposition of sanctions,” said Mohammad Javad Zarif, Iran’s Foreign Minister in his Twiter.
A screenshot of Iranian FM Mohammad Javad Zarif following creation of INSTEX
Also, Sayyid Abbas Araqchi, Zarif’s deputy says Tehran needs to create a similar entity to “ease rial-based transactions for the Iranian side”.
“This mechanism will benefit us fully when it will be used for non-European firms and companies. It appears that this will happen in a next step to allow our international purchases through this mechanism,” he added.