In a world with two parallel financial systems, a country would not necessarily have a single reserve bank.
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All tagged INSTEX
In a world with two parallel financial systems, a country would not necessarily have a single reserve bank.
At the end of January, the board of Instrument in Support of Trade Exchanges (INSTEX) took the decision to liquidate the company.
INSTEX alone cannot save the JCPOA, the future of which essentially depends on US-Iranian relations. INSTEX can nevertheless help maintain the nuclear agreement until, or even after, diplomatic solutions are found.
The Iranian healthcare system is reliant on long-standing relations with European suppliers to see it through the COVID-19 crisis. European governments should press the US to strengthen the humanitarian exemptions in its Iran sanctions.
The Germany foreign ministry has announced that INSTEX, the trade mechanism backed by nine European states to facilitate humanitarian trade with Iran, has completed its first transaction.
At a time when constructive diplomatic relations between Europe and Iran may prove instrumental in efforts to stave off a regional conflict, the speedy operationalization of INSTEX remains an imperative—a point underscored by EU foreign policy chief Josep Borrell following his first trip to Tehran earlier this month.
Medicines and foodstuffs are exempted from the U.S. sanctions on Iran, but the prospect of punishment has spooked potential suppliers, and especially foreign banks. Although this problem is easily fixed, President Donald Trump’s administration has been shamefully tardy in doing so.
The aftermath of the protests presents significant challenges for the Iranian leadership. The Islamic Republic is dealing with severe economic difficulties and a fraying of the political fabric. Washington will use the recent unrest to argue against Europe engaging with Tehran. But diplomacy remains the only viable path to deescalation. Europeans, led by Emmanuel Macron, must protect the space for dialogue.
◢ Since the year 2000, Iran has about doubled its annual imports of pharmaceutical products from the European Union, reflecting both advances in Iranian healthcare and the growth in Europe-Iran trade ties. But a distortion in the value of trade relative to quantity means that Iran is paying significantly more than the likes of Russia, Turkey, and Pakistan for each kilogram of medication.
◢ The state-owned company at the center of European efforts to save the Iran nuclear deal is entering its next phase of development. In a push to process transactions more quickly, INSTEX is rolling out a new factoring service for European exporters. The company is also making new hires that will enable it to expand operations more quickly in the coming year.
◢ The Trump administration has imposed successive rounds of economic sanctions targeting nearly all productive sectors of Iran’s economy. But a new wave of restrictive measures now under consideration would have the practical effect of totally severing Iran’s economy from Europe, critically undermining humanitarian trade with Iran.
◢ Iran’s decision to scale down its commitments under the 2015 nuclear deal abandoned by President Donald Trump signifies a serious foreign policy failure for the EU and its member states. They have acted too meekly and ineffectively in the face of unilateral U.S. sanctions, and this unnecessary softness may well come back to haunt them as the U.S. use of extraterritorial sanctions expands.
◢ The standoff between the Trump administration and Iran is escalating, and Europe is caught in the middle. Brussels and national governments in the U.K., France and Germany, meanwhile, have been criticized by Iran for their response to U.S. sanctions. Europeans “speak eloquently”, Iran’s foreign minister Mohammad Javad Zarif said in February. “They also need to walk the walk.” But it would be wrong to dismiss Europe’s efforts as hopeless.
◢ What does Zarif's averted resignation mean for Iranian diplomacy? With the erosion of a unipolar world Iran has the chance to shift its foreign policy, whilst continuing to comply with the JCPOA and maintain broad diplomatic engagement.
◢ Following weeks of speculation, France, the United Kingdom, and Germany (the E3) have formally registered a special purpose vehicle (SPV) to help facilitate trade with Iran – trade that the return of US sanctions has significantly hampered. Companies in Europe and Iran are eager to know if the system can be of practical use. The assessment below lays out INSTEX’s likely structure.
