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Europe launches sanctions-busting Iran payment vehicle
By Damon WAKE
Bucharest (AFP) Jan 31, 2019

Iran welcomes new EU trade entity as 'first step' (2ndlead)
Tehran (AFP) Jan 31, 2019 - Tehran on Thursday cautiously welcomed as a "first step" the expected launch of an EU trade entity aimed at saving Iran's nuclear deal by bypassing US sanctions.

The special payment mechanism "is the first step within the set of commitments the Europeans have made to Iran which I hope will be fully implemented and not be incomplete", said deputy foreign minister Abbas Araghchi, according to state news agency IRNA.

The formal announcement of the new payment vehicle is expected to be made on Thursday afternoon by the German, French and British foreign ministers in Bucharest.

The entity, registered in France with German governance and finance from all three countries, will allow Iran to trade with EU companies despite Washington reimposing US sanctions after President Donald Trump pulled out of the 2015 accord.

The three countries are the European parties to the landmark deal that curbed Tehran's nuclear ambitions in return for sanctions relief.

The new European scheme called INSTEX -- short for Instrument in Support of Trade Exchanges -- was originally intended to allow Iran to sell oil to the EU on a barter basis.

But, with Europe currently buying very little Iranian crude, it is now aimed at small- and medium-sized companies.

Iran is hoping that INSTEX will allow the Europeans to meet Tehran's trade demands and keep the nuclear deal afloat.

"This entity has been in principle designed for sanctioned goods," Araghchi said.

He denied claims by some in Iran that sanctioned goods would not be traded by INSTEX.

"Some have said that this entity has been designed for non-sanctioned goods such as food, etc. It is possible that the beginning of activities might be with these goods until a mechanism for payments takes form," he said.

"But in principle this entity would (only) be useful for sanctioned goods and the objective of the entity is for sanctioned goods," Araghchi added.

Earlier on Thursday, the editor-in-chief of the conservative Javan daily, panned INSTEX as an "oil for food" programme and warned the government not to "try to deceive the people and take credit".

But Heshamtollah Falahatpisheh, a prominent MP and head of parliament's influential national security and foreign policy commission, hailed the entity.

"The registration of the financial channel between Iran and Europe is a great victory," he said.

It "strengthens the Islamic republic of Iran's clout in international politics".

Britain, France and Germany on Thursday launched a trade mechanism to bypass US sanctions on Iran, drawing praise from Tehran -- and a warning from Washington.

Brussels hopes the long-awaited special payment system will help save the Iran nuclear deal by allowing Tehran to keep trading with EU companies despite Washington reimposing sanctions after President Donald Trump abruptly quit the accord last year.

The three countries -- the European signatories to the 2015 deal that curbed Tehran's nuclear ambitions in return for sanctions relief -- launched the device, which has been in preparation for months, at a meeting of EU foreign ministers in Bucharest.

Iran's Foreign Minister Javad Zarif welcomed the news as a "long overdue first step".

"We remain ready for constructive engagement with Europe on equal footing & with mutual respect," he added in a tweet.

But US 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.

While the new institution, called INSTEX -- short for Instrument in Support of Trade Exchanges -- is a project of the three governments, it will receive the formal endorsement of all 28 EU members.

The company was registered in Paris on Tuesday with an initial 3,000 euros in capital and a supervisory board with members from France and Germany, and chaired by a Briton.

"INSTEX will support legitimate European trade with Iran, focusing initially on the sectors most essential to the Iranian population -- such as pharmaceutical, medical devices and agri-food goods," the foreign ministers of Britain, Germany and France -- Jeremy Hunt, Heiko Maas and Jean-Yves Le Drian -- said in a joint statement.

In the longer term, INSTEX aims to be open to third countries wanting to trade with Iran, the statement said -- an ambition unlikely to please Washington.

Hunt said the move was "a clear, practical demonstration" of Europe's commitment to continuing the nuclear deal, but insisted it "does not in any way preclude us from addressing Iran's hostile and destabilising activities".

Europe has toughened its tone on Iran's ballistic missile programme, human rights record and interference in Middle East conflicts.

- 'First step' -

Iran's deputy foreign minister Abbas Araghchi welcomed the move but said that to be of any value it must allow trading of sanctioned goods.

EU diplomatic chief Federica Mogherini, who has led the bloc's efforts to save the nuclear deal, said INSTEX was "essential for the continued full implementation of the nuclear deal".

INSTEX is not yet operational and needs Iran to set up a parallel structure of its own, a French government source told AFP -- something which may take some time to complete.

While it is aimed at small and medium sized companies, the French source said it would send an important message to Iran about Europe's commitment to keep the nuclear deal alive.

"We have to try to reduce the effects of Trump's decision," the source said.

"It is not a primarily commercial move but a strategic one."

For some in the EU, INSTEX represents the start of a European fightback against Washington's swingeing extra-territorial sanctions -- which are enabled by the dollar's role as the world's dominant reserve currency.

- Transatlantic discord -

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

The UN atomic agency has certified Iran's compliance with its obligations 13 times and even the head of the CIA said this week that Tehran was abiding by the accord -- drawing a furious response from Trump.

Joseph Giordono-Scholz, spokesman for the US embassy in Berlin, insisted INSTEX would not undermine America's economic campaign against Tehran.

"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 US companies," he said.

A number of major international companies have already pulled out of Iran in the face of dire warnings that the US will vigorously pursue any company breaching the sanctions regime.

The launch of INSTEX comes with EU countries growing increasingly concerned about Tehran's ballistic missile programme, as well as its human rights record, its interference in Middle East conflicts and recent attempted attacks against opposition groups in Europe.


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OIL AND GAS
EU's Iran payments vehicle ready - but stuck
Brussels (AFP) Jan 28, 2019
A payment mechanism the EU hopes will save the Iran nuclear deal by bypassing US sanctions is ready, diplomats said Monday, but is held up by disagreements among European countries. The "Special Purpose Vehicle" is being put together by Germany, France and Britain, the European signatories to the 2015 accord that curbed Tehran's nuclear ambitions in return for sanctions reilef. The entity, to be based in France with German governance and finance from all three countries, will allow Iran to recei ... read more

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