Spain says it’s ‘studying’ to join European INSTEX to do trade with Iran

Madrid says PM Sánchez is considering plans on how to join the E3 in the financial channel with Iran that has been created to allow humanitarian trade and other items in the future.

Ali Dashti

21 May 2019
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Madrid says PM Sánchez is considering plans on how to join the E3 in the financial channel with Iran that has been created to allow humanitarian trade and other items in the future.

Spains Foreign Minister Josep Borrell. AFP via Getty Images/Jure Makovec

Spain says it’s mulling the option to join the European financial channel with Iran INSTEX in a bid to continue trade with Tehran and save the nuclear deal from falling apart.

“Spain is very concerned about the evolution of relations with Iran,” Spanish Foreign Minister Josep Borrell told the press before attending a European Union meeting in Brussels convened Monday last week at the height of political tensions between the US and Iran.

He expressed his concern for Donald Trump Administration’s decision to end oil waivers for the eight Asian and European countries as well as Tehran’s six-month deadline to Europe.

Video: Spanish FM Borrell says Madrid eyes INSTEX to trade with Iran 

“This is very bad news,” he warned before assuring that Europea “will do whatever it can to keep this agreement alive”.

The Spanish foreign minister went on to say that “Spain is positively considering to join the financial company created by France, Germany and the UK that will allow European firms to keep working with Iran”.

He was referring to the European Special Purpose Vehicle (SPV), also called the Instrument in Support of Trade Exchanges (INSTEX) that was created by the three European signatories to the Iran nuclear deal of 2015, also known as the Joint Comprehensive Plan of Action (JCPOA).

The mechanism was created on the last day of January by the E3 foreign ministers on the sidelines of a European Union summit in the Romanian capital Bucharest.

Borrell stressed that Spanish Prime Minister Pedro Sánchez is “studying how to join the project”, without further elaborating the issue.

Iran has also put in place a similar company to start trade with Europe. However, there has been no trade exchanges so far.

Although Iran will start trade with Germany, France and the Uk in the first phase of INSTEX, many other European states with high business stakes in Iran, such as Belgium or Czech Republic, have also reiterated their desire to join the financial channel, designed to carry out humanitarian trade with Tehran.

“There are still many risks in doing business with Iran. However, apart from the UK, France and Germany that have created the INSTEX, other European countries also want to join this financial mechanism,” Christophe Smitz, Commercial Attaché for Belgium's French-speaking Wallonia region at the Belgian Embassy in Iran told Mohammad Reza Karbasi, Deputy for International Affairs at Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) in March.

Spain in Cuba/Iran

It's the first time that Madrid government announces officially that it's also weighing options to start trade with Iran through the European payment channel.

The announcement could be considered significant especially at a time when Spain is sparring with the US over its sanctions on European companies that are operating in Cuba.

The dispute has opened a transatlantic legal challenge with European Union warning the US that it could “trigger an unending chain of countersuits against U.S. companies operating in Europe”.

"Trade between Spain and Iran had started to grow during the last years," International Director of the Spanish Chamber of Commerce Alfredo Bonet was cited as saying May last year. 

He noted that Spain's exports to Iran rose 88% since the nuclear deal entered into force in 2016 while the Iberian country's imports from Iran also grew to 1.543 billion euros by 2017.  

There were 25 Spanish infrastructure, rail, tourist, food and energy companies active in Iran just several months before Trump abandoned the international treaty on Iran's nuclear programme.

Helms-Burton law

The US administration has activated the third title of the law that allows American nationals to file complaints in US courts against those companies that are benefiting from their confiscated lands and properties during the Cuban 1959 Revolution.   

The move could jeoperdise Spanish hotels firms, working as mixed (state-private sector) companies, that run 60 locations, owned by the Cuban state.

“The Spanish government will not only expand its investments in Cuba or other countries, but will also help them to find solutions when there is a problem,” said Spanish Industry, Trade and Tourism Minister Reyes Maroto during a visit to the island nation early May.  

Spanish foreign minister has also said his country would take the US to the World Trade Organisation (WTO).

"This is further proof of a lack of cooperation on the part of the U.S. administration and the adoption of extra-territorial measures which, according to us, are an abuse of power which we oppose," Borrell said during an interview with Spanish public television TVE, AFP reported.

"This is going to open a legal battle, we will go to the WTO [World Trade Organization]," he warned.

UE’s blocking statute

The 28-member bloc, that has formally shown its objection to the disputed law, says it is considering to apply the “Blocking Statute” that doesn’t allow extraterritorial US laws to be implemented in the European Union.

The union was also considering to apply the same mechanism to protect the European companies in Iran after Trump withdrew the US from the nuclear treaty and reimposed economic sanctions on Iran.

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