The Finance company INSTEX aims to facilitate trade between the EU and Iran to bypass the sanctions of the USA. The DW explains how the System works and who the players are.
Germany, France and the UK have established an EU-supported financial company, in particular, the U.S. economic sanctions against Iran intended to avoid. The company with name INSTEX (Instrument in Support of Trade Exchanges, dt.: Instrument for the support of the Trade) to help save the US President Donald Trump up announced nuclear deal with Tehran. Trump had left the nuclear deal with Iran in may 2018, and which causes the re-introduction of economic sanctions. The EU is sticking to the agreement and is looking for Ways to get despite the US sanctions, business ties with Iran in an upright position.
How does the System work?
The new company will serve to offset exports of European companies with the Iranian exports. Practically, this is equivalent to a stock exchange: Iran gets no money for its exports, but Were.
Who is involved?
The founding of the society have driven Germany, France and the UK, three of the signatories to the Iran nuclear agreement. The three countries have sought a broader base of support by all 28 EU member States. The should be able in a second Phase, to connect. INSTEX has its headquarters in France and has a German management.
The boss of this financial company of the former German Commerzbank Manager and Central Asia-expert By fishermen. This is evident from the corresponding entry in the French register of companies and was also already confirmed by EU diplomats in Bucharest.
Is INSTEX work?
After the official registration of the company or technical Details have to be clarified. This can take months. Theoretically, INSTEX is to protect European companies from US sanctions. Banks, which were up to now, such transactions have to fear becoming a target of these sanctions. You money threatening in this case, met in the billions. Many European companies have already withdrawn as a reaction to the sanctions imposed by the United States from Iran.
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The payment system is aimed initially at small and medium-sized European companies without a major presence in the United States.
It is unclear whether the trade sanction in the transferable life-important products can boost the beleaguered Iranian economy. In addition, it remains to be seen whether the trade will help Iran, Inflation, and currency devaluation to curb. However, the expected transactions with Europe are expected to some of the foreign exchange problems of Iran to absorb it, at least.
How the United States react?
The United States wants to continue to exert pressure on Iran. The Trump Administration rejects Iran’s missile program and Iran’s growing influence in the Middle East. The White house has warned European banks and companies that you have to expect high fines and penalties if they violate U.S. sanctions. However, it is questionable whether Washington would take the European governments that want to trade with Iran, directly into the visor. Because that would strain relations with key U.S. allies Germany, France and the United Kingdom significantly, and financial turbulence.
What was the answer of Iran?
Iran is frustrated by the slow reaction of Europe to the re-introduction of U.S. sanctions, but will comply with its obligations under the nuclear agreement, as long as he promises them economic benefits. “If we can’t sell our Oil, and no financial can carry out transactions, I don’t think us will use the nuclear agreement,” said Ali Akbar Salehi, head of atomic energy organization of Iran.
The Iranian President Hassan Rouhani is under pressure from clerical and security policy hard-liners to end a business that you objected to originally. The economic Benefit remains low, it may be that the patience of Iran has come to an end.
Tehran expects Russia and China, the other signatories of the nuclear agreement, that you will get the business, despite the U.S. sanctions in an upright position. The Oil trade with China has fallen in the last few months, on a three-year low.