The representatives of Germany, France, and the UK have registered a company to let it trade with Iran despite the US sanctions. The company still needs to be approved by 28 EU members.
Earlier this year, the UK, France, and Germany registered a Special Purpose Vehicle (SPV). The main goal of creating this legal entity is to back trading with Iran as workaround to the sanctions imposed on Iran by the United States. The company is named INSTEX SAS (Instrument in Support of Trade Exchanges). It was registered on Paris on January 30th. It's also interesting to note that the company's legal address match the one of the French Ministry of Trade and Finances.
The supervisory board of the newly-created company includes 3 diplomats from the UK, France, and Germany. So, the transactions that will be made with the help of this company are expected to let European companies continue trading with their Iranian partners desite the mentioned sanctions.
As you probably know, in 2015, the UK, France, and Germany, who represented the EU (the so-called Euro trinity), and the USA signed an agreement with Iran. This agreement capped Iran's nuclear program in exchange for canceling the Western sanctions previously imposed on it. However, in May 2018, Donald Trump decided to quit this agreement. Shortly after that, the USA re-imposed those sanctions on Iran. the EU representatives keep on participating in the agreement. The thing is that the Euro trinity, Russia and China assume that Iran hasn't violated the nuclear agreement.
After creating the mentioned SPV, the initiative is still required to be approved by all 28 EU members. For now, it's unclear when it's actually going to happen. It's reported that Spain is against launching the SPV.
The mechanism implies that Iran is required to mirror the system in the form of creating a similar company to retain the trade relations with the EU. In particular, the company is expected to create an environment for transactions in the national currency. Also, the system may be expanded to include non-EU states as well.
Project Fails To Come Up To Expectations
According to Reuters, the project named INSTEX can only start functioning within a couple of months. A lot of technical issues are yet to be discussed, agreed, and resolved. Also, the scale is not expected to be as big as expected. The project was aimed at allowing Europe to keep on buying Iranian oil. However, the real state of affairs is that Europe can actually do without Iranian oil. With tat being said, the ambitions were reduced considerably. So now it seems that the key reason for this project is to sustain the export of not sanctioned products to Iran (medicine, food,, etc.)
It seems that Europe is not willing to openly confront the USA when it comes to the anti-Iranian sanctions, especially as the U.S. Department of the State warned that those EU states willing to violate those sanctions and keep trading with Iran would risk to get serious consequences, including the loss of the access to the American financial, banking, and business systems.
The bottom line is that it's hard to say whether anyone is actually going to make use fo INTEX, especially as this project doesn't allow the EU to increase the trade turnover with Iran considerably.
