There is ground for optimism that other European countries as well as Russia and China will later join a financial system for trade with Iran that currently involves France, Germany and Britain, a former diplomat said.
“Germany, France and Britain are major economic, political and diplomatic powers in the European Union. These countries can definitely bring other European states on board in the next stage and even encourage other countries, particularly China and Russia, to trade with Iran using the same mechanism,” Abdolreza Faraji-Rad also told the Iranian diplomacy website in a recent interview.
The three European signatories to the Iran nuclear deal or the Joint Comprehensive Plan of Action—which the United States abandoned last year—announced the creation of the Instrument in Support of Trade Exchanges or INSTEX on Jan. 31 to facilitate legitimate trade between European economic operators and Iran.
Changed Format
US pressure has caused the proposed mechanism to undergo certain changes, Faraji-Rad said, adding that it was originally intended to be launched with the support of all EU members.
INSTEX, which is registered in France, will be financed jointly by the three countries and run by a German banker, according to the New York Times.
The current limited scope of the European financial mechanism seems to be aimed at gaining concessions from Tehran on non-nuclear issues, a former diplomat says
“INSTEX aims in the long term to be open to economic operators from third countries who wish to trade with Iran and the E3 continue to explore how to achieve this objective,” French, Germany and British foreign ministers said in a joint statement, pledging that they will pursue its further development with “interested European countries”.
Asked whether the European trade vehicle can survive in its current format and under the present circumstances, the expert said, “Things are moving slowly due to US pressure but have not come to a halt. Progress is being made, albeit in a slow manner.”
Multiple Purposes
Faraji-Rad, who is also an expert on international affairs, said the format defined for the European financial system and the fact that it will initially be used only for small trade such as humanitarian products and food, rather than oil and gas is meant to serve multiple purposes and can be considered an effort to meet both Iran and the US halfway.
The current limited scope of the mechanism seems to be aimed at “gaining concessions from Tehran on other issues such as its missile and defense capabilities as well as its regional diplomacy,” Faraji-Rad said, referring to the remaining points of dispute between Iran and the West.
“By launching this mechanism, these three countries want to demonstrate their commitment to what has been stipulated in JCPOA to be able to continue their relations with Iran under the deal,” he said, adding that they also want to assert their independence from the White House.
However, at the same time, they aim to play down the role of the trade vehicle in circumventing US sanctions to be able to narrow the gap between Europe and America, which resulted from their differences over various issues.
