The new system aims to uphold the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal, which will facilitate France, Germany, and Britain to trade with Iran.
The new measure, called the Instrument in Support of Trade Exchanges will allow trade between the EU and Iran without relying on direct financial transactions.
Federica Mogherini, the EU’s chief diplomat and the new mechanism’s main advocate, said in Bucharest, Romania, at a meeting of the bloc, “the EU is fully behind the full implementation of the Iran nuclear deal.”
France has registered the new special purpose vehicle, Instex, which will be run by German banker and former Commerzbank manager Per Fischer.
Ellie Geranmayeh, senior policy fellow at the European Council on Foreign Relations, said “key component of the new special purpose vehicle (SPV) is sovereign participation of the shareholders and senior officials involved with management. France, Germany, and Britain are sharing risk exposure, which could help reduce the likelihood of further U.S. sanctions, and Instex has sovereign backing and therefore may not be liable to U.S. pressure like private counterparts.”
Iran’s economy has received a severe jolt after the implementation of President Donald Trump’s decision of the nuclear agreement. Though the proposed deal aims for positive trade for the country, Geranmayeh says this isn’t a solution to Iran’s economic problems, just one part in an effort to, “contain the damage and prevent the free fall of the economy.”
The U.S. is still to make any formal announcement over the new measure. According to CNBC, the State Department spokesperson said: “We are closely following reports about the SPV to gain additional details about the mechanism. 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 U.S. financial system and the ability to do business with the United States or U.S. companies.”