Given the European Union’s apparent incapability in setting up its proposed financial mechanism and its likely inefficiency, it is essential for Iran to be prepared and devise contingency plans for the prospect of the mechanism's eventual failure, a foreign policy analyst said.
According to Mohammad Sadeq Kharrazi, a former Iranian ambassador to France, Europe has not been able to proceed with its plans to counter the United States’ sanctions against Iran and the future of its efforts is clouded in uncertainty.
“Europeans have performed so poorly that they have not even managed to preserve Iran’s access to [financial messaging service] SWIFT, which is a European network,” he wrote in a recent article published by the news website Iranian Diplomacy.
The EU is a signatory to the 2015 nuclear deal between Iran and major world powers and feels obliged to salvage the agreement by protecting Tehran’s interests after the US scrapped it and renewed its sanctions.
The financial mechanism, known as the Special Purpose Vehicle, is part of Europe’s attempts to bypass the sanctions by enabling non-dollar transactions with Iran.
However, over two weeks from the promised date, the system has not been set up yet since no country has given final consent to hosting the facility, although France and Germany have reportedly volunteered recently.
According to Kharrazi, EU countries do not even seem to have reached a consensus on developing or using such a system.
“On the one hand, all European countries are under pressure from the US, on the other, smaller EU members refuse to give in to pressure from major states and expect them to bear the consequences of their policies themselves,” he wrote.
In addition, several countries such as Denmark and Belgium are trying to evade requests of hosting SPV by making baseless charges of terrorism against Iran and the eastern bloc countries are not able to take such a risk due to their weak economies and dependence on the US.
Doubtful Efficiency
According to Kharrazi, the efficiency of a system that has created so much trouble even before becoming operational would be uncertain after it takes effect and faces US reactions.
Several companies, such as the British Petroleum, have already announced that they would not use the network under any circumstances, not wishing to be at the receiving end of US penalties.
"Although it is said that SPV is aimed at small- and medium-sized enterprises with no interaction with the US, it is not certain if these SMEs will continue to cooperate with Iran in the face of severe US punitive measures," he said.
Kharrazi also pointed out that in the short or medium term, Europe will not be able to eliminate its reliance on the US in terms of security.
“It is also worth noting that Iran-EU financial transactions amount to €21 billion which fades in comparison with about $1 trillion worth of trade between Europe and America,” he wrote, implying that EU is unlikely to prefer Iran over its heavyweight western ally.
As incapable as it is, Europe is pressing Iran to make compromises over regional issues so that it can convince the opponents of SPV, or requires the country to join international conventions as a prerequisite for the launch of the system.
"Government officials need to decide whether they want to keep on with this state of affairs or are ready to take the next hard step," Kharrazi concluded, referring to Iran’s possible withdrawal from the nuclear pact.
