EU, Russia, China approve payment method to bypass US sanctions

In a snub to the U.S. from some of its closest European allies, the foreign ministers from the European Union (EU), Russia and China have concluded an agreement which will create a payment avenue to pursue legitimate trade with Iran.

Despite friction with Washington, a new legal entity, the Special Purpose Vehicle (SPV), will allow broad financial transactions between the EU and Tehran.

Details over how exactly the SPV will function were not announced, but EU technical experts were scheduled to meet in the immediate future to negotiate formalities of the plan.

Although no specifics of the plan were available, economists theorize the EU is inclined to create an exchange system in which trade between Iran and foreign nations could proceed by barter to circumvent the SWIFT banking system.

Under the SPV, trade experts speculate credit for goods purchased by European firms could be used as remuneration to a EU exporter for goods to Iran.  In this likely scenario, experts also say the Euro would be the primary currency used in transactions and no U.S. dollars would be used.

The SPV’s management would fall under the direction of the EU’s External Action Service.

In a joint statement released Tuesday, officials with the EU, U.K., France, China, Russia and Germany declared the purpose of creating the SPV was to “to protect the freedom of their economic operators to pursue legitimate business with Iran.”

“Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran’s exports, including oil,” a joint statement read.

A decision which some say could be either a symbolic act to shame Washington or could backfire, the resolution by the EU to resume normal trade with Iran drew a swift rebuke from U.S. Secretary of State Mike Pompeo.

Blasting the decision as strengthening Iran, a state sponsor of terror, Pompeo said:

“Unfortunately, just last night I was disturbed and indeed deeply disappointed to hear remaining parties in the Iran (nuclear) deal announce they are setting up a special payment system to bypass U.S. sanctions. This is one of the most counterproductive measures imaginable for regional global peace and security.  By sustaining revenues to the regime you are solidifying Iran’s ranking as (the) No. 1 state sponsor of terror.”

A quandary created over President Trump’s decision to withdraw from the landmark 2015 nuclear pact with Iran, Iran’s European trading partners have struggled to circumvent reimposed U.S. sanctions.

Since the resumption of sanctions, Iran’s currency has plunged in value, nations have dialed back on purchases of Iranian goods, particularly petroleum, and its exports are expected to decline.

 

[The Guardian] [Deutsche Welle] [Reuters] [Photo courtesy AFP via Al Bawaba]

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