Approving laws to enforce compliance with the standards of the Financial Action Task Force would enable Iran to exert more pressure on Europe to activate its proposed mechanism for continued trade with Iran in the face of United States’ sweeping sanctions, a foreign relations official said.
“One could say this has become an excuse for Europeans to put off the financial system’s establishment,” Abdolreza Faraji, director general of Iran’s Strategic Council on Foreign Relations, said in an interview with ISNA on Friday.
Iran is facing harsh sanctions that the US reimposed after withdrawing from the 2015 nuclear agreement, formally known as the Joint Comprehensive Plan of Action, last May.
The European Union has introduced compensatory measures to salvage the deal, including a financial mechanism known as the Special Purpose Vehicle, which aims to circumvent US restrictions by facilitating non-dollar trade with Iran.
Its implementation, however, has been delayed until now, having missed two deadlines so far. The legal infrastructure for SPV was first set to be created by November when the strict sanctions on oil and banking sectors were to take effect.
Later, a top EU official told the press that it was expected by the New Year. Yet, there is no sign of the mechanism's activation.
Europe’s Excuse
Foreign affairs experts and analysts, including Faraji, attribute Europe’s hesitation partly to Iran’s tardiness in passing laws related to FATF.
“It would be better [to comply with the taskforce’s regulations] as soon as possible so as to prevent them [Europeans] from having such a pretext and to be able to exert more pressure on them to implement the plan,” Faraji said.
FATF is an international organization that monitors money-laundering worldwide.
Non-compliance with the guidelines would add Iran to the organization’s blacklist, making foreign investors and banks reluctant to deal with it.
Iran has not yet adopted all the required reforms to bring itself into line with FATF norms. The relevant bills have been going to and from between the parliament and the Guardians Council, a vetting body that ensures draft laws do not contradict religious laws or Iran’s Constitution.
FATF had previously set a deadline of October for Iran to complete all reforms but later extended it to February and continued suspending its countermeasures, which can go as far as limiting or even banning transactions with a country.
Quit or Stay Question
Faraji noted that although Iran is experiencing economic hardship as a result of US measures, it is not essential at present to consider opting out of the nuclear deal.
“If the US manages to reduce the country’s oil exports to zero and cut its international trade completely, Iran would then have to decide if it is necessary to abandon JCPOA,” he said.
For now, the official said, Iran has maintained its oil exports helped by sanctions waivers granted to eight buyers and is also able to trade with some countries using their national currencies.
“[Besides,] it is unlikely of Europe to announce that it will not launch the SPV as the EU’s political body is strongly defending JCPOA,” he added.
Faraji argued that due to the lack of international support for Washington’s anti-Iran policies as well as the possible objection by the now Democrat-dominated Congress, “it is not in the country’s interest to [hastily] take practical action in return for the US withdrawal or Europe’s foot-dragging with regard to SPV”.
