Europe sets up Iran trade mechanism to bypass US sanctions

Europe sets up Iran trade mechanism to bypass US sanctions

Germany, France, and Britain have launched a mechanism to allow financial flows to be sent to Iran that would not violate USA sanctions in an attempt to keep alive the landmark 2015 nuclear deal.

Trump pulled the US out of the 2015 Iran nuclear deal and reimposed sanctions a year ago.

The French Foreign Ministry told CNN on Thursday that a joint statement regarding the payment vehicle would be sent out later in the day when the foreign ministers of the European Union meet in Romania's capital Bucharest.

The E3 underline their commitment to pursue the further development of INSTEX with interested European countries to make this instrument in support of trade exchanges with Iran operational by following the steps set out above.

Upon his arrival to the EU meeting in Romania, Belgian Foreign Minister Didier Reynders tried to soften this blow to American-European relations by stating that Europe is still taking seriously several areas of mutual concern regarding Iran and that no-one is forcing any business to trade with anyone. "This has to do with our security interests in Europe". If the scheme works, it is likely to be most useful to small and medium-sized firms with no links in the US.

Iran will pay for the products via barter instead of using dollars, as most of its banks, including the Iranian central bank, were cut off from the SWIFT global financial network after the USA pulled out from the nuclear deal with Iran last May.

"Entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the US financial system and the ability to do business with the United States or USA companies", a spokesman for the mission said.

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Iran cautiously welcomed the news as a "first step" but USA officials dismissed the idea that the new entity would have any impact on efforts to exert economic pressure on Tehran, and fired a fresh warning at anyone thinking of trading with the Islamic republic. It is not expected to address oil-related transactions, which have dropped off since previous year and are Iran's primary source of foreign currency.

"The way in which. the American administration makes policy in general at the moment, with a lot of sanctions, with the fact that worldwide agreements are scrapped, is not a good way to cooperate", Annegret Kramp-Karrenbauer, the head of the ruling CDU party in Germany, told Bloomberg, a USA news agency, last week.

"This is a clear, practical demonstration that we remain firmly committed to the historic 2015 nuclear deal struck with Iran, the Joint Comprehensive Plan of Action, for as long as Iran keeps implementing it fully", he added.

"This is an important step and a political signal by E3, who feel duty bound to uphold the Iran nuclear deal as long as Iran fulfills all its obligations as set out in the treaty", German officials told German global broadcaster DW.

A U.S. Embassy spokesperson in Germany warned that companies engaging in "sanctionable activity involving Iran risk severe consequences" but said the new organization would not in any way affect the U.S. campaign to apply maximum financial pressure on Iran.

Washington has warned the EU against trying to sidestep its sanctions on Tehran, while the Europeans - along with the deal's other signatories Russian Federation and China - say Iran has not broken its side of the deal and should be allowed to trade.

The three big European powers are also assessing whether to push for new sanctions on Iran over its missile program, diplomats have told Reuters.

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