Europe sets up INSTEX to save Iran
France, Germany and Britain has officially set up a European payment channel for transactions to facilitate trade with Iran and circumvent U.S. sanctions, German NDR broadcaster reported.
The European channel will be named INSTEX (Instrument In Support Of Trade Exchanges). INSTEX will be based in Paris and be managed by a German banking expert. The UK will head the supervisory board.
The payment channel would allow for European countries to continue trade with Iran but could put them on a collision course with Washington.
The European side intends to use the channel initially only to sell food, medicine and medical devices in Iran. However, it will be possible to expand it in the future.
The statement comes after spokeswoman for EU Foreign Affairs and Security Policy Maja Kocijancic announced that the work aimed at the creation of the special purpose vehicle (SPV) had already entered its final stage.
Senior research fellow of the Institute for Oriental Studies of the Russian Academy of Sciences, Vladimir Sazhin, speaking to Vestnik Kavkaza, said that Europe may well use INSTEX in the future as an instrument of pressure on Iran. "At the same time, we should understand that Europe is mainly practicing on Iran possibilities of its economic independence from the U.S. Thus, INSTEX is, first and foremost, an experiment. If it is successful, it is quite possible that Europe will use this tool for settlements with other countries, if such a need arises," he said.
According to Vladimir Sazhin, Washington's aggressive response to the introduction of INSTEX is possible. "If Trump decides, then economic pressure on many EU structures is quite possible, first of all, of course, on Britain, Germany and France. Not so long ago, the U.S. delegation visited Europe with another message to Europeans that no tools to circumvent U.S. sanctions should be set up. Nevertheless, I suppose, de jure JCPOA will be preserved," the senior research fellow of the Institute for Oriental Studies expects.
The senior research fellow at the European Research Centre of the International Relations Institute of the Russian Academy of Sciences, Vladimir Olenchenko, predicts that the United States will not take any aggressive measures against the EU in response to the creation of INSTEX. "When the U.S. imposed restrictions on steel imports from Europe last spring, the U.S. showed that they would speak with the EU only in the plane of American interests. By the time Washington announced its withdrawal from the JCPOA, it was already clear to Europeans that the U.S. ignore European economic and investment interests. Therefore, the market has already taken all the risks into account, both in U.S. politics and in the policies of Britain, Germany and France," he explained.
"Now it was emphasized once again that this is a reaction to the U.S. side, not some proactive actions by Europe, aimed at protecting its own interests, not to jeopardize American ones. Therefore, most likely, there will be a positional confrontation between the United States and the INSTEX countries. Iran is only one of the topics on which Europe and the United States have contradictions. This is already becoming part of the current policy," Vladimir Olenchenko concluded.