Russia, Netherlands eager to join Europe’s INSTEX

High-level Russian and Dutch officials have said that their countries are very keen on maintaining trade with Iran through the INSTEX mechanism.

7 June 2019
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High-level Russian and Dutch officials have said that their countries are very keen on maintaining trade with Iran through the INSTEX mechanism.

Russian Ambassador to the European Union (EU) Vladimir Chizhov. EUROPEAN COMMISSION

A Russian diplomat has said that Moscow is in talks with Europeans to be included in the trade mechanism created by three EU members to ease sanctions pressures on Iran, according to reports. 

The Russian Permanent Representative to the European Union Vladimir Chizhov told Interfax news agency that Russia is holding talks with European countries on being included in the INSTEX trade mechanism with Iran.

The Instrument In Support of Trade and Exchanges (INSTEX) was set up by the United Kingdom, France and Germany in January to enable trade with Iran, as U.S. sanctions have generally stopped European companies from doing business with the country. 

When last year the United States withdrew from the 2015 nuclear agreement, Iran began asking Europe to ignore the sanctions Washington was imposing and allow trade. After months of delays, Europe finally announced the establishment of INSTEX as a vehicle to enable some trade with Iran without technically violating U.S. sanctions.

Washington has opposed the trade mechanism and has warned European companies not to do business with Iran. So far, INSTEX has not resulted in any trade deals.

Chizhov acknowledged that the mechanism has not been successful so far. "[We are] holding talks. They are not making it a secret that INSTEX was created and continues to be created with quite serious difficulties” he said and added, "However… they are not giving up plans to set this instrument in motion”.

Russia’s motivation to be involved in INSTEX might not be just related to its close relations with Iran. If Europe starts helping circumvention of U.S. sanctions, it could have future benefits for Russian entities which are also under some sanctions.

Dutch interest in INSTEX 

Netherlands high-level authorities say they country is interested in joining the Europeann Special Purpose Vehicle (SPV) to do trade with Iran. "The Netherlands has consistently expressed support for INSTEX and has indicated its intention to become a shareholder," Dutch Foreign Minister Stef Block and Foreign Trade and Development Cooperation Minister Sigrid Kaag said on Wednesday 05 June. 

They were responding to written questions from two lawmakers Socialist Sadet Karabulut and Labour MP Lilianne Ploumen about the Dutch government's measures to counter the US unilateral sanctions against Iran. 

"Before the Netherlands can actually become a shareholder, INSTEX must first be properly developed. A final decision will take some time," added the Dutch ministers, according to the Duthc government website.  

The Netherland officials say the country is against the US unilateral sanctions. "The Netherlands is opposed to the unilateral extraterritorial effect of legislation of other countries that violates international law. This is the case, for example, if they touch Dutch companies while acting in line with Dutch and European legislation," they wrote. 

The two Dutch ministers say they have no current figure on how much damages has been inflicted to Dutch companies that did trade with Iran, stressing that US sanctions have affected the Dutch-Iran annual trade volume. 

"Since the entry into force of the JCPOA (Joint Comprehensive Plan of Action), the Netherlands has gradually strengthened trade relations with Iran and Dutch exports to this country have increased from €376 million (2014) to €1.06 billion (2017)," according to the document. 

"Dutch exports to Iran also dropped to €718 million last year. This is also at European level; The trend is visible: between 2017 and 2018, EU goods exports to Iran decreased from € 10.8 billion to € 8.9 billion," the two Duthc ministers have said. 

Iranian exports to Netherlands amounted to a little bit over $41m during the same perdion (201-2018), according to the Islamic Republic of Iran Customs Administrations (IRICA) statistics. 

The Dutch minister stressed that "a number of large companies in particular suspended activities in Iran last year. In addition, larger and smaller Dutch companies remain active on the Iranian market, either in the form of actual trade or by maintaining contacts". 

Earlier in May, Spanish Foreign Minister Josep Borrell had also expressed that Madrid is studying options on how to join the European financial mechanims with Iran. 

Video: Spain's FM discusses Madrid's interest in joining the INSTEX


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