How will France, Germany and the United Kingdom try to dodge US sanctions to trade with Iran?

The French, German and British governments have presented a developed financial mechanism so that companies in the European Union (EU) can avoid the sanctions imposed by the United States on Iran after Washington withdraws from it. Nuclear agreement signed last year. in 2015

"We believe that the nuclear pact is in the interest of the security of Europe and that's why we achieved this agreement allows Iran to continue its economic activities, now also with a payment mechanismsaid German Foreign Minister Heiko Maas Thursday before the Romanian press.

The minister introduced the mechanism, named after INSTEX SAS (Trade Support Instrument, in its acronym in English), in a brief appearance before reporters his French counterpart, Jean-Yves Le Drian, and the British Jeremy Hunt.

Maas pointed out that "with the decision of these three European countries, which signed with China, Russia and the United States, the nuclear pact with Iran in 2015, This demonstrated the importance they attached to the agreement that Washington had withdrawn in 2018.

At that time, US President Donald Trump said that it was a bad deal because it gave too much economic benefit to Iran and criticized Tehran's military activities abroad, its support to terrorist groups and the development of ballistic missiles, aspects not covered by the nuclear pact.

As a result, Washington has reinstated sanctions against Iran, including the ban on using the dollar as the currency of exchange and the ban made to US companies to trade with Iran. Moreover, it was forbidden to trade with companies from other countries which, in turn, negotiated with Tehran, which caused a leak of European companies fearing to lose access to the American market, the Persian country. .

The failed agreement plans to lift the same economic sanctions against Iran, which has strangled its economy over the past decade, in exchange for freezing key aspects of its civilian nuclear program for a period of 15 to 25 years., so that he does not develop capabilities for an atomic arsenal.

Europe's efforts to keep Iran in the nuclear deal

International inspectors they have corroborated many times that the theocratic regime had fulfilled its share of the market, delivering its enriched uranium reserves, dismantling part of its infrastructure and limiting its investigations, but still Washington considers that the agreement was poorly designed from the beginning.

After the departure of the United States, Iran repeatedly threatened to withdraw from the agreement and resume its military nuclear program if the European powers did not create any system allowing Tehran access to the benefits of international trade, especially oil and gas, of which he is one of the world's largest producers.

"The lifting of sanctions is an essential aspect of the nuclear agreement with Iran. The instrument launched today will provide economic operators with the necessary framework to conduct a legitimate trade with Iran ", Federica Mogherini, High Representative of the EU for Foreign Policy.

"This step shows that we continue our journey together and resolutely within the European Union, even if others follow another path.", said the German minister with reference to the United States.

Maas urged Iran not to abandon the pact because the EU has complied with the creation of this mechanism, demanding that Tehran be able to benefit from trade with the bloc of the EU.

"This partnership should allow European companies wishing to trade lawfully with Iran, especially in the area of ​​health and nutrition, this vital sector for the Iranian people, "said Le Drian.

How does the European instrument allow to avoid sanctions?

INSTEX, of which France, Germany and the United Kingdom are shareholders and whose design took more than six months, will be based in Paris, France; It will be headed by the German economist Per Fischer, former director of the bank Commerzbank; and its directory will be located in the United Kingdom.

Initially, INSTEX will focus on goods initially not included in US sanctions because of their humanitarian nature, such as drugs, medical supplies, food and consumer items. But if that succeeds, it is expected that extend your operations to other objects and allow entry to other countries.

When the United States reinstated the sanctions in 2018, many large European companies have suspended their trade with Iranin an exercise of extreme caution, because they privileged their commercial ties with Washington.

For the moment it is unknown if these same companies are willing to take risks using INSTEXor if on the contrary it will remain a niche for small businesses without commercial ties with the United States and therefore little to lose.

according to Financial Times, the entity will work as a system of direct exchange of goods without money between them. For example, a cargo of Iranian oil will be marketed via INSTEX in exchange for a shipment of European products of equal value. Although the details of the instrument are unknown.

The announcement of the creation of the entity was celebrated by Iran, but the reaction of the United States is not yet known. For some, it could be sweet if the INSTEX was limited to the sale of medicines and food, but at the same time, it could trigger a political crisis between Washington and Brussels if it only gave Tehran a break., especially if the instrument is effective and extends its use to China and Russia, and even trigger a wave of new sanctions on the entity itself and the countries that approve it.

With information from AP and EFE