France, Germany and the United Kingdom officially launched the special purpose vehicle (SPV) on Thursday 31 January, which was immediately welcomed by the High Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini.
Announced by Mrs. Mogherini in September (see EUROPE 12103), this mechanism should enable European companies to continue their trade with Iran despite US sanctions and the risk of extraterritorial measures from Washington.
“We are pleased to announce the creation of Instex, an instrument to support trade (...) which aims to enable European companies that so wish to pursue legitimate trade in areas such as health and agri-food, which are essential sectors”, announced French Foreign Minister Jean-Yves Le Drian, on the margins of the Informal Council of Foreign Ministers in Bucharest, along with his German, Haiko Maas, and British, Jeremy Hunt, counterparts.
Earlier in the week, Mr. Maas explained that the SPV would cover “areas not sanctioned by the United States”.
Instex SAS, short for Instrument in Support of Trade Exchanges, was registered on Thursday 31 January at the Paris Commercial Court and its address corresponds to the French Ministry of the Economy and Finance. It will be led by a German and use British, French and German funds.
Expected by the Iranians for 4 November and the entry into force of American sanctions to allow them to continue selling oil, Instex should therefore be above all symbolic. “This is an important political gesture”, said Mr. Le Drian, noting that this mechanism was in continued support of the Iranian nuclear agreement. According to him, this mechanism is also "a gesture of protection of European interests; companies that respect our law must be able to trade”.
Mr. Hunt said that there were still technical and legal steps to be taken before the mechanism was fully operational. "As soon as possible", Mr. Le Drian hoped, and he also hoped that “the text would be quickly supported by others”. Earlier in the day, Belgian Minister Didier Reynders explained to EUROPE that his country could participate in this mechanism. “I have always said that we were quite ready to participate in a European operation; since we support the logic of the nuclear agreement, we really want its implementation”, he stressed, while acknowledging that it was “particularly complicated for many companies”. “Ultimately, it is companies that will decide whether or not they want to continue working in Iran; it is they who will decide whether to do so, knowing the risks of US sanctions”, he added.
On the United States side, the red lines are clear. US Ambassador to the EU, Gordon Sondland, told Europeans earlier this week that if companies used this mechanism for anything other than humanitarian goods, for activities “directly or indirectly sanctioned” by his country, they would have great difficulty or even be unable to trade with the United States, under penalty of sanctions. (Original version in French by Camille-Cerise Gessant)