France, Germany and Britain have officially put in place a European system to help facilitate trade with Iran.
The move will allow the European Union to circumvent U.S. sanctions in an effort to continue humanitarian trade with Iran and work to uphold what is left of the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal. U.S. sanctions went into place in November halting a significant portion of trade between Iran and its European partners.
Federica Mogherini, the EU’s chief diplomat and the new mechanism’s main advocate, said Thursday in Bucharest, Romania, at a meeting of the bloc that the EU is “fully behind the full implementation of the Iran nuclear deal.”
The new measure, called the Instrument in Support of Trade Exchanges will allow trade between the EU and Iran without relying on direct financial transactions.
Instex has been registered in France and will be run by German banker and former Commerzbank manager Per Fischer. The new special purpose vehicle will have a supervisory board consisting of diplomats from all three countries: Miguel Berger of Germany, Maurice Gourdault-Montagne of France and Simon McDonald of Britain.
According to Ellie Geranmayeh, senior policy fellow at the European Council on Foreign Relations, a “key component of the new SPV is sovereign participation of the shareholders and senior officials involved with management.” She also added that France, Germany and Britain “sharing risk exposure” could help reduce the likelihood of further U.S. sanctions, pointing out that Instex has sovereign backing and therefore may not be liable to U.S. pressure like private counterparts.
The new trading system is coming at a critical time for Iran. The country’s economy has taken a hit since President Donald Trump‘s decision to pull out of the landmark nuclear agreement. Disruption of imported medicine and food has hit the country hard along with high unemployment.