Long-Awaited INSTEX Transaction Insufficient

EghtesadOnline: The first transaction conducted under the European trade mechanism to bypass American sanctions is so small that its effect on Iranian economy is insignificant, a lawmaker said.

News ID: ۷۸۵۴۷۱

06 April 2020

"The meager financial transaction is hardly noticeable and will soothe no pain," Jalil Rahimi was also quoted as saying by ICANA.

The financial mechanism known as INSTEX (Instrument in Support of Trade Exchanges) was launched by the three European parties to the 2015 nuclear deal (France, Germany and Britain) to keep the agreement alive months after the United States quit it and restored sanctions on Iran in 2018, Financial Tribune reported.

The barter system, which aims to facilitate legitimate trade between Iran and the European Union by circumventing US sanctions, conducted its first transaction last week.

It involved the sale of €500,000 (£442,000) worth of medicine by a private company in Germany to a firm in Iran, sources with knowledge of the deal told the Independent.

"Now the first transaction is complete, INSTEX and its Iranian counterpart STFI [the Special Trade and Finance Institute] will work on more transactions and enhance the mechanism," the German Foreign Ministry said in a statement.

The export of humanitarian goods took place amid the global spread of the new coronavirus, although the products are unrelated to the disease, according to the diplomatic source.

Rahimi said the recent trade is nothing similar to what was expected of an independent financial channel agreed between Tehran and Europe.

"Americans are intensifying the sanctions … the independent trading channel needed to have offset those sanctions," he said.

Iranian officials have declared that the US sanctions have seriously hampered efforts to fight the COVID-19 pandemic in Iran and called on the global community to stop observing them.

Several countries, including China, also called on the US to lift any previous sanctions to ensure Iran receives timely humanitarian relief from the United Nations or other organizations.

Although food and medicine are apparently exempt from US sanctions, financial and banking restrictions have effectively impeded the import of such goods.

Washington has set up a channel through Switzerland to dispatch humanitarian goods to Iran.

It also offered to help Iran fight the disease, but Iranian leaders have rejected any help from the US, accusing it of potentially dispatching spies or exacerbating the illness.

Rahimi said the small transaction of INSTEX was only conducted under public pressure to remove the medical sanctions during the pandemic.

"This measure was taken to reduce public pressure so that Europeans can announce that they provide humanitarian help for these countries [affected by US sanctions]," he said.