The CEO of a newly registered Iranian reciprocal company for trade with Europe says the company is ready to launch its first trade with Europe, according to a notice on the Central Bank of Iran website.
The company was officially registered in late April as a corresponding entity of European Instrument in Support of Trade Exchanges, known as INSTEX.
Aliasghar Noori said Wednesday that in coordination with Iranian and European banks the first financial transaction will be carried out through the newly created mechanism.
Noori said his company has held talks with Iranian banks and aims to meet Iranian importers and exporters to brief them about the functions of the new mechanism and the facilities it offers in trading with Europe.
France, Germany and the United Kingdom, three EU countries party to the Iran nuclear deal, announced in February the creation of a financial mechanism for non-dollar trade with Iran.
Despite creation of INSTEX, the long-awaited European mechanism is not yet operational as had been expected by businesses in and outside Iran.
Snags on the European Side
The chief of Foreign Investment & Consultancy Committee of Tehran Chamber of Commerce Ferial Mostofi says banking restrictions are a major obstacle to the implementation of the long-awaited financial mechanism.
In order for INSTEX to take effect, a bank should accept “the risk of conducting transactions with Iran,” she said.
“Because any money transfer in Europe must be carried out as per a contract that stipulates that the transfer is a settlement of payment(s) for traded goods with Iran, European banks generally refuse to take the risks,” IBENA quoted her saying.
Asked whether it is obligatory to mention “Iran” in the contract, she said recommendations of the Financial Action Task Force, the anti-money laundering body has made it mandatory that banking transactions should be undertaken based on contracts mentioning the direction of, and the reason for, the money transfer.
She referred to her talks with INSTEX president Per Fischer during his visit to Tehran in March, saying that he too had the same concern about finding a bank willing and able to handle banking transaction with Iran.
Regarding another challenge, Mostofi pointed to the shortage of enough money in the new mechanism, which she said would create difficulties for settling payments.
With respect to the US move to end sanction waivers it had granted to Iranian oil importers last year, she said due to the new oil export restrictions there would not be enough money in INSTEX accounts to be able to function as planned.
“If oil is not purchased from Iran, there will be no money in INSTEX…”
