Britain, France and UK create a firm to trade with Iran

BRUSSELS: Furious after President Trump pulled out of the Iran nuclear deal and reimposed punitive banking sanctions last year, European leaders vowed to find a way to enable Tehran to keep doing business with the rest of the world. After months of delay, and after enduring mockery from the Trump administration, three major European allies on Thursday finally introduced a financial mechanism to do just that. The question now is whether anyone will actually use it.

The new company, called Instex, for Instrument in Support of Trade Exchanges, would essentially allow goods to be bartered between Iranian companies and foreign ones without direct financial transactions or using the dollar. By avoiding the American banking system and currency, the hope is that European companies and others will feel confident that they can do business with Iran without being subject to the sanctions.

The European countries — Britain, France and Germany — were all signatories to the Iran deal in 2015, as was the US under President Obama. The Europeans, along with Russia and China, who were also signatories, have all vowed to keep to the terms of the agreement, which was intended to ensure that Iran could not build a nuclear weapon.

On Tuesday, leaders of the American intelligence agencies told Congress that Iran was in compliance with the deal, which only covers nuclear activities and not other issues like missile development or support for terrorist groups. That judgment apparently outraged President Trump, who said in a Twitter message that “Perhaps Intelligence should go back to school!”

Instex, which was registered in France on Thursday and is known technically as a special-purpose vehicle, will be financed jointly by the three countries and run by a German banker. A formal announcement is expected later on Thursday in Bucharest, Romania, where EU foreign ministers are meeting. It is unclear exactly when the company will become operational or whether other countries will join. American officials have tried to dissuade the Europeans from setting up the company and at the same time mocked the idea, arguing that it would produce little trade. On Thursday, the state department said that it was following reports about Instex but that it did not expect the mechanism to have any impact on US’ “pressure campaign” against Iran.