After the United States unilaterally pulled out of the JCPOA in May, the Europeans decided to save the Iran Nuclear Agreement because they thought if the agreement is nullified, they would lose Iran and would no longer have control over Tehran. Therefore, European states decided to stay committed to the nuclear deal with Iran and promised to fulfill their obligations stipulated in the JCPOA to keep Iran in the agreement. One of these obligations was the execution of a financial mechanism called the Special Purpose Vehicle (SPV) for general trade with Iran and to enable Tehran to continue oil sales.
The “Trade Support Mechanism” known as Special Purpose Vehicle is, in fact, a financial channel that allows Iran-Europe trade despite the US sanctions. Within this financial channel, Iranian oil would be exchanged for goods without money changing hands, with the SPV serving as a third-party entity to handle transactions.
The SPV with Iran has been registered in France and will be managed by Per Friedrich, 69, a prominent German banker and former chairman of the Commerzbank. The three European countries, France, Britain, and Germany, are shareholders and they hope that other European countries will gradually join them. The field of activity of these three countries focuses primarily on food, medicine, and medical equipment. Europe’s argument is that these items are not under US sanctions.
In pursuance of this mechanism, the foreign ministers of the EU-3 eventually announced a financial channel to support trade with Iran, called INSTEX, after a few weeks later. INSTEX (Instrument in Support of Trade Exchanges) will cover humanitarian and non-sanctioned goods in the first stage, based on criteria such as European and UN sanctions, FATF (Financial Action Task Force) standards, and the specific procedures of this financial channel.
Although this European measure can be effective in counteracting US sanctions against Iran, yet the primary issue about launching this financial channel is that the executive sector, namely the commercial and banking institutions of Europe have made no comments on this financial channel and have not said if they are willing to join or not.
In particular, these institutions are still influenced by American propaganda; secondly, a high-level delegation from the United States arrived in Europe several days ago and met with officials from Norway, Sweden, and Denmark, and was supposed to move to southern Europe afterward. The mission is mandated to ban European countries from cooperating with Iran.
The third issue about this mechanism, which President Donald Trump recently emphasized, is that if the states intend to circumvent Iran’s sanctions, the US will boycott them.
The fourth issue is an internal Iranian issue, that is to say, there are still protocols like Palermo and CFT (Combating the Financing of Terrorism) that have not been endorsed which will make it harder for both sides.
On the other hand, French Foreign Minister Jean-Yves Le Drian disregarding the fact that the new financial mechanism is also aimed at securing the interests of small and medium-sized European companies has laid three conditions for Iran and said that Tehran should decide about these issues. They are the issue of missile control, respect for human rights and, ultimately, Iran’s alleged interference in the region; therefore, the set of these factors and reasons have undermined the SPV to some extent although there is still hope that things will be on track which ushers a new atmosphere of cooperation between Iran and Europe.
After all, European officials despite all the developments that have taken place in Europe against Iran over the past month continued their efforts to save the JCPOA by accomplishing the primary stages of the SPV. Of course, the United States continues to threaten the companies that are supposed to cooperate with Iran, and Trump has emphasized that countries that circumvent the sanctions against Iran will be boycotted so there are still such ups and downs between the United States and the European Union.
Ultimately, if the European SPV initiative becomes operational with Iran and if other countries join the channel, new spaces will be created for both sides, and Tehran can benefit from the JCPOA despite the US withdrawal from the agreement.