Britain, France and Germany on Thursday launched a long-promised joint trade mechanism designed to evade U.S. sanctions on Iran, drawing applause from the Islamic republic — and an immediate warning from Washington.
The “special purpose vehicle,” or SPV, is part of joint E.U. efforts to keep international trade with Iran alive after U.S. President Donald Trump pulled out of a previous Obama-era trade agreement last May, slamming it as a “horrible, one-sided deal.”
Iran’s Foreign Minister Javad Zarif welcomed the news as a “long overdue first step” after its launch at a meeting of E.U. foreign ministers in Bucharest.
“We remain ready for constructive engagement with Europe on equal footing & with mutual respect,” he added in a tweet.
While the new institution, called INSTEX — short for Instrument in Support of Trade Exchanges — is a project of the three governments, it will receive the formal endorsement of all 28 EU members.
The company was registered in Paris on Tuesday with an initial 3,000 euros in capital and a supervisory board run out of the UK.
The U.S. Embassy in Berlin acknowledged it will be watching the operations of INSTEX, warning: “As the President has made clear, entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the US financial system and the ability to do business with the United States or U.S. companies.”
However, it added it did not expect the new payments system would “in any way impact our maximum economic pressure campaign” against Iran.
A number of major international companies have already pulled out of Iran in the face of dire warnings that the U.S. will vigorously pursue any company breaching the sanctions regime.
The launch of INSTEX comes with E.U. countries growing increasingly concerned about Tehran’s ballistic missile programme, as well as its human rights record, its interference in Middle East conflicts and recent attempted attacks against opposition groups in Europe.
AFP contributed to this report
Follow Simon Kent on Twitter: Follow @SunSimonKent or e-mail to: firstname.lastname@example.org