Europeans Exploring Payment System With Iran

EghtesadOnline: Germany and its European partners are considering setting up a payment system with Iran, which allows the continuation of business transactions with the Islamic Republic once US sanctions kick in, an economy ministry spokeswoman said on Friday.

News ID: ۷۴۶۰۰۵

15 September 2018

“As you know, it is a central goal of the EU and the German government to ensure that the processing of transactions is secured,” the spokeswoman said during a regular government news conference.

“All options are being considered,” she was quoted as saying by Reuters.

The idea of creating a payment system independent of the US has become a central feature of European policy in its bid to save the nuclear deal it signed with Iran in 2015, in the wake of the US pullout from the agreement in May, according to Financial Tribune.

The latest comments by the German Economy Ministry official comes after the country's Foreign Minister Heiko Maas last month also called for setting up independent payment channels, largely as a way for European businesses to avoid US sanctions targeting any firms—whether inside or outside the US–that do business with Iran.

"As Europeans, we have clearly told the Americans that we consider phasing out the nuclear deal with Iran a mistake," Maas wrote in an op-ed for the German news paper Handelsblatt.

"It is, therefore, essential that we strengthen European autonomy by setting up payment channels independent of the US, creating a European Monetary Fund and building an independent SWIFT system. The devil is in the thousand details," he added.

According to CNBC, while the SWIFT system oversees international bank transfers, the creation of a European monetary fund would solidify the bloc's ability to assist countries hit with economic crisis.

The creation of independent financial channels would allow it and its businesses to avoid prohibitive sanctions, but would likely deepen an ideological schism between the US and Europe that has grown during the tenure of US President Donald Trump.

Trump's decision in May to withdraw from the 2015 international nuclear agreement was a particular major blow for US-European relations.

Germany had helped France, Britain, Russia, China and the US, under then-president Barack Obama, to broker the deal with Iran and had tried to persuade Trump to remain within the pact.

US sanctions were reimposed on Iran in early August, nevertheless, and the US said any companies doing business with Iranian entities, even those outside the US could be subject to secondary sanctions, much to the chagrin of Europe.

Echoing those calls, European Commission President Jean-Claude this week called for euro to challenge the US dollar’s global dominance.

“The euro must become the face and the instrument of a new, more sovereign Europe,” Juncker said.

“It is absurd that Europe pays for 80% of its energy import bill—worth €300 billion a year—in US dollar when only roughly 2% of our energy imports come from the United States. It is absurd that European companies buy European planes in dollars instead of euro,” he said as reported by Bloomberg.