EU, Iran to Launch Financial ‘Vehicle’ for Easing Trade

Five world powers and Iran agreed late on Monday to set up a financial facility in the European Union to facilitate payments for Iranian imports and exports, including oil, a key move sought by Tehran following the US pullout from the 2015 nuclear deal and its reimposition of sanctions. 

After a closed-door meeting in New York, foreign ministers from Britain, France, Germany, Russia, China and Iran said in a joint statement that the “Special Purpose Vehicle” will “assist and reassure economic operators pursuing legitimate business with Iran”, AP reported. 

Participants of the meeting, which was chaired by European Union foreign policy chief, Federica Mogherini, reaffirmed their “strong will” to support further work to operationalize the new financial facility and continue engagement with regional and international partners. 

Blocking Regulations 

They also welcomed the fact that updates to the EU's "Blocking Statute" and the European Investment Bank's external lending mandate to make Iran eligible entered into force on August 7. 

The blocking regulations were agreed in 1996 as a countermeasure to the US extraterritorial economic sanctions against Cuba, which EU governments argued benefited US foreign policy interests at the expense of European sovereignty, Reuters reported.   

The statute bans any EU company from complying with US sanctions and does not recognize any court rulings that enforce American penalties. 

The statement said these initiatives are aimed at preserving the nuclear agreement, officially known as the Joint Comprehensive Plan of Action, which is “in the international interest”.

Iran’s Compliance 

The participants recognized that Iran has continued to “fully” and “effectively” implement its commitments under the deal, as confirmed by 12 consecutive reports of the International Atomic Energy Agency, the UN nuclear watchdog. 

“Alongside implementation by Iran of its nuclear-related commitments, the lifting of sanctions, including the economic dividends arising from it, constitutes an essential part of the JCPOA,” the statement said.

It also noted that the remaining parties to the deal “deeply regret” the US exit and are “mindful of the urgency and the need for tangible results” to salvage the accord and will continue to implement it in “good faith” and in a “constructive atmosphere”.

US President Donald Trump announced in May that he was unilaterally pulling out of the agreement because he felt it was not strong enough and did not cover other issues of concern to the US and its allies, such as Iran’s influence in the Middle East and ballistic missile program, which Tehran says is solely for defense purposes.  

Iran’s economy is already suffering from the sanctions that Washington reimposed after walking away from the deal and the US has threatened to punish companies from other nations that continue doing business with the country.

In sharp contrast, the five other world powers who signed the nuclear deal remain strongly committed to it and the new financial facility is almost certain to anger the Trump administration.

Diplomatic Achievement 

The participants called the agreement “a key element of the global non-proliferation architecture and a significant achievement of multilateral diplomacy” endorsed unanimously by the UN Security Council through Resolution 2231.

In addition, they said they will continue to support the modernization of the Arak research reactor as part of the accord and the conversion of the Fordow facility into a nuclear, physics and technology center.

They also pledged to back "projects in the area of civil nuclear cooperation" with the Islamic Republic.

Substantial Progress

The statement highlighted the “extensive work and substantial progress undertaken [and made] to date, the intensification of technical dialogues, efforts to maintain and improve bilateral economic relations, and the mobilization of considerable resources by all, including with third countries interested in supporting the JCPOA and in pursuing, in a timely and effective manner, the normalization of trade and economic relations with Iran.”

They agreed to keep progress under close review and to convene the Joint Commission of the remaining signatories, including at the ministerial level, as appropriate to advance common efforts. 

The participants reaffirmed their joint statement on July 6, “in particular to pursue concrete and effective measures to secure payment channels with Iran”. 

Despite the European Union efforts, a number of businesses, including French energy giant Total and carmakers Peugeot and Renault as well as Germany's Siemens and Daimler, have already suspended operations in Iran for fear of triggering US sanctions, according to AFP.

Bilateral Talks 

Before the multilateral meeting on Monday, Foreign Minister Mohammad Javad Zarif held a meeting with the EU foreign policy chief, in which they discussed the latest developments concerning the nuclear pact and regional issues such as years-long conflicts in Yemen and Syria.  

Mogherini reiterated Europe’s continued support for the nuclear agreement, saying that practical measures to meet Iran's demands will soon be implemented, the Foreign Ministry's official website reported.