The EU introduced a new vehicle that Brussels hopes will enable European businesses to continue operating in Iran, circumventing US sanctions.
The announcement comes on the eve of two separate addresses of the UN General Assembly by US President Donald Trump and Iranian President Hassan Rouhani.
Signatories to the 2015 Joint Comprehensive Plan of Action (JCPOA) agreed on Monday, September 24 to establish a channel to facilitate payments for Iran’s exports, including oil. The facility should also facilitate imports.
The so-called Special Purpose Vehicle (SPV) will enable Britain, China, France, Germany, Russia and the EU “to protect the freedom of their economic operators to pursue legitimate business with Iran.”
On August 6, Washington reintroduced financial sanctions against Iran, while those affecting oil exports come to effect on November 4. The Iranian currency (rial) has lost two-thirds of its value due to US sanctions.
EU companies have been forced to leave Iran as US sanctions come into effect in November. Among the companies leaving are French Total, Air France-KLM, Peugeot, and Renault, Germany’s Siemens and Daimler, and the UK’s British Airways.
The latest EU firm to abandon links with Iran is the French state-owned Bpifrance Bank, a lender that was also attempting to set up a special vehicle to circumvent US sanctions against Iran.
Bpifrance wanted to set up a system of euro-denominated export guarantees for Iranian buyers of French goods and services. However, the lender resolved it would be unable to avoid US extraterritorial reach.
EU foreign policy chief Federica Mogherini said on Monday that the vehicle should allow the continuation of legitimate financial transactions and, therefore, continued trade with Iran, “in accordance with EU law.”
Mogherini reiterated the EU position that the JCPOA agreement is preventing Iran from developing nuclear capability.
President Trump has warned that those who do not seize trade with Iran “risk severe consequences,” making clear that Washington is determined to enforce secondary sanctions.