As and when the US sanctions against Iran echoed future threats of war, the European nations decided to join hands to mitigate the crisis. Six European countries said that they will join a full-fledge financial system to take Iran out of the economic crisis.
But does that mean they will altogether challenge the US’ supremacy in handling Iran and its prolonged nuclear deal, from which the US withdrew in 2018?
The decision came ahead of the scheduled meet that is to take place between the US president and European nations leaders in London in early December.
The adverse economic impacts of the US sanctions were recently seen on Iranian streets, where protestors stood together against government’s decision of cutting gasoline subsidies to fund handouts for Iran’s poor. The protests were a huge example of how the inefficient governmental policies, influenced by the sanctions, affected the civilians.
The European countries such as Belgium, Denmark, Finland, the Netherlands, Norway and Sweden in a joint statement on Friday tried to ease off the situation.
The countries stated that they are in the process of becoming shareholders of the Instrument in Support of Trade Exchanges (INSTEX), which was launched by Britain, France and Germany in January to enable companies to trade with Iran without using US dollars or going through US banks. The attempt was to shield companies from US sanctions.
It appears that through this move, the European countries are obliged to do the necessary and are clearly ignoring the US’ warning of not to engage in various transactions with Iran or face secondary US sanctions.
In their joint statement, the six European nations said: “In light of the continuous European support for the agreement and the ongoing efforts to implement the economic part of it and to facilitate legitimate trade between Europe and Iran, we are now in the process of becoming shareholders of INSTEX, subject to completion of national procedures.”
Initially, the parent companies stated that INSTEX will facilitate trade with Iran in humanitarian goods, such as food, medicine and medical devices that the US declared to be exempt from its sanctions. Later, they decided to expand INSTEX to cover other types of trade also.
But what is worrying is the fact that since the launch of INSTEX, no companies have engaged in humanitarian or other trade with Iran, which appeared as a plus point for the US that has long opposed its use for any “sanctionable activity”. It appears that companies are not ready to risk punishment to process transactions through INSTEX.
Previously, Iran created its own counterpart called Special Trade and Finance Instrument (STFI) mechanism that has still not been acknowledged by many EU countries as all of its shareholders are Iranian banks sanctioned by Washington for illicit activities.
At a time, when the Europeans have been trying to save Iran from the US sanctions with INSTEX, the Iranian officials have been complaining that its European creators have been too slow to get the companies to start using it. They have even threatened to continue violating more provisions of the 2015 nuclear deal, which the EU member states see as a major contributor to global nonproliferation and Middle Eastern stability.
Meanwhile, the Iranians remain concerned about the economic impacts of the US sanctions on their lives.