Iran to Set Up its Part of Nuclear Deal Mechanism 'This Month'

Iran hopes to have its part of a new payments vehicle —devised to bypass US sanctions—ready within a fortnight, Deputy Foreign Minister Abbas Araghchi said on Wednesday.

"We hope it will be before the end of the Iranian calendar year," Araghchi told reporters in Vienna, referring to March 20.

He said that Iran now had a "clearer picture" of how the new vehicle, known as INSTEX, would work and that its managing director would visit Tehran for discussions "very soon.”

But he added that only when the mechanism was fully operational would Iran be able to assess whether it "can work properly and can produce results, (and) can do payments between Iran and European countries".

Araghchi was in the Austrian capital for a "joint commission" with representatives from China, Russia, Britain, Germany and France—all signatories of the international deal on Iran's nuclear programme.

INSTEX is seen as key to European Union efforts to preserve the deal struck in 2015 between world powers and Iran over its nuclear program, the Joint Comprehensive Plan of Action (JCPOA).

The US was also a signatory but last May President Donald Trump withdrew from the deal and in November imposed sweeping new sanctions on Iran.

Remaining Members 'United'

Araghchi said there was "very strong support" for the deal from all participants at the meeting.

He emphasized that Iran expected INSTEX to work "for all goods and commodities, not only humanitarian goods", but that it could start with humanitarian goods "in order to set the patterns for doing business with Iran.”

"Once the patterns are set, then other goods, including sanctioned goods—and oil of course—would be added to this mechanism," he added.

"It is late but still a move in the right direction," Araghchi said. 

INSTEX was launched at the end of January by Britain, France and Germany, who sit on a supervisory board chaired by a UK national. It is registered in Paris.

Russia's ambassador to Vienna's UN organizations, Mikhail Ulyanov, who was also at the meeting, told AFP the remaining signatories to the deal were "united in the need to save the JCPOA.”

"There are some problems, particularly in the economic field but we are aimed at overcoming them as soon as possible," Ulyanov said.

He said the speed with which INSTEX became fully operational was up to Germany, France, Britain and Iran.

But Ulyanov added: "I believe it may take a rather long time, at least a few months; most likely even more."

In February the UN's International Atomic Energy Agency watchdog said Iran was adhering to the terms of the JCPOA, under which Tehran drastically scaled back its nuclear program in return for sanctions relief.

Washington has urged European signatories to the JCPOA to follow Trump's example and withdraw, but this has been rejected by the Europeans.

Photo Credit: IRNA

EU Bid to Sidestep US Iran Sanctions Hits Quicksand

The EU effort to save the Iran nuclear accord by building a mechanism to buy Tehran's oil despite the return of US sanctions has run into difficulty.

Brussels supports the deal struck in 2015 to curb Iran's nuclear ambitions, which was dealt a blow in May when the US President Donald Trump pulled out.

But Washington has announced the reimposition of broad sanctions from November 4, including on Iran's oil sector, scaring off European traders.

Last month at the United Nations, the EU announced plans for a "special purpose vehicle"—a payment system to continue trade and business ties with Iran.

The renewed US sanctions come into force on Sunday, and work on the mechanism is still going on. 

"We are in the process of putting measures in place. Work is ongoing," EU foreign affairs spokeswoman Maja Kocijancic told reporters on Wednesday.

The payment mechanism has the backing of the remaining five signatories to the Iran deal—Britain, China, France, Germany and Russia.

But senior officials in Brussels admit that it is proving difficult to set up. 

"The undertaking is very complicated... the vehicle will not be operational on November 5," one told AFP.

The EU will publish a statement on Tuesday reaffirming support for the nuclear deal, as long as Tehran continues to respect its side of the bargain.

And an EU diplomat said the plan to create the new entity would be confirmed at the same time.

"The intention is to create a company registered in an EU country which will allow transactions," the official said. 

"We need to supply it with capital and clarify its governance -- this is not easy and it will not just start working overnight."

The three EU deal signatories—France, Britain and Germany—are involved in the project, along with other countries which buy Iranian oil.

But not all EU countries are on board, Iranian agents have been accused of plotting attacks on opposition figures in Europe and US elections are looming.

One European diplomat said the bloc wants to avoid a "direct confrontation" with Trump's administration over Iran before the November 6 congressional poll.

But in any case, the plans—championed by EU high representative for foreign affairs Federica Mogherini—are progressing very slowly.

"For the moment, we're nowhere. There's no will to proceed on the behalf of the member states," one of those negotiating the design of the mechanism said.

Another official insisted: "The plan's not dead." But he admitted the whole enterprise is "politically risky" for capitals wary of antagonizing Washington. 

Oil Prices Up?

US Secretary of State Mike Pompeo has explicitly warned against EU states or companies trying to get around the sanctions, which are a US policy priority. 

The idea is that the SPV acts as a clearing house. Traders would pay into it to buy Iranian exports and Iran's purchases in Europe would be paid by the fund.

This would allow Europeans to trade Iranian oil without sending cash directly to the Islamic republic.

And EU leaders have not ruled out allowing entities from other states keen to avoid US sanctions—notably India, China and Turkey—to use the SPV.

This would blow a hole in US efforts to use oil sanctions to pressure Iran into more concessions than agreed to in the nuclear deal—or face collapse.

But it would also accelerate the widening of the rift between the US and its allies on foreign policy, and Trump may seek to punish firms using the vehicle.

Europe nevertheless hopes it can avoid an immediate crisis, and persuade Iran to stick by its side of the nuclear deal despite Washington's refusal to do so.

“Iranian oil sales won't drop to zero on November 5, the day after the US reimposes sanctions," a European expert told AFP.

"The Americans known that prices are already high and that Iran's exit from the market will only force them higher, which isn't in their interests."

European clients—mainly in Spain, Italy, Greece and France—buy 20 percent of Iran's oil exports.

According to the European Commission, last year EU members bought nine billion dollars of Iranian exports and Iran spent 10 billion in the union.

Photo Credit: Wikicommons