INSTEX Operation Positive But Unsatisfactory

EghtesadOnline: The eventual operationalization of the European financial channel is welcomed by Iran, but does not meet the country’s expectations, a top diplomat said.

News ID: ۷۴۹۸۲۳

06 April 2020

“We take the operation of INSTEX as a good omen, but this is much less than what we expect,” Abbas Mousavi said during a regular press briefing held through video conference on Monday, ISNA reported.

The financial mechanism called the Instrument in Support of Trade Exchanges was set up early last year by France, Germany and Britain, the three parties to Iran’s 2015 nuclear deal, after the United States quit it and reimposed sanctions on Tehran in 2018, according to Financial Tribune.

Its purpose was to bypass US sanctions and facilitate trade between Iran and the European Union, and possibly other third parties later, so as to keep the agreement alive.

After a long delay, it eventually conducted its first transaction, which involved the sale of medicines worth €500,000 ($539667.50) by a private company in Germany to a firm in Iran.

Although medicine and other humanitarian goods are formally exempt from US sanctions, banking restrictions and threats of secondary sanctions have severely hampered the supply of such products.

The German Foreign Ministry later said in a statement that INSTEX and its Iranian counterpart STFI [the Special Trade and Finance Institute] will work on more transactions and enhance the mechanism.

Mousavi said INSTEX is only a prelude to Europe’s fulfillment of its obligations under the nuclear deal.

“INSTEX was launched to be a means for the implementation of the nuclear agreement and the commitments they [Europeans] made after America’s illegal exit from JCPOA,” he said, using the abbreviation of the deal’s formal name, the Joint Comprehensive Plan of Action.

He added that Iran also expects players in other sectors, including banking and energy, to meet their obligations.

Tehran has called on Europe and other parties to devise mechanisms through which Iran can continue to export its oil and repatriate its revenues, as promised by JCPOA in return for Iran’s curbs on its nuclear program.

Although Iran has reduced its compliance with the deal, it has announced that all its measures will be reversed as soon as it can once again enjoy the economic benefits of JCPOA.