The Strategist

Europe finds a way around Iran sanctions

01/28/2019 - 09:48

Europe’s mechanism of circumventing sanctions against Iran will commence working in the coming days. This was said on the air of France Inter Radio by French Finance Minister Bruno Le Maire.

marcoverch via flickr
marcoverch via flickr
The mechanism is an independent financial institution, which will be created jointly by the UK, France and Germany.

According to Le Maire, such a mechanism will make it possible to demonstrate that Europe can move forward and withstand the world's largest powers.

Recall that in May last year, the United States announced its withdrawal from the nuclear agreement on Iran and resumption of sanctions against this country in full. However, European countries refused to support this decision and expressed their intention to continue trade with Tehran.

In September 2018, the United Kingdom, Germany, France, China, Russia and Iran, following a ministerial meeting on the UN fields, said in a joint statement that the EU would create a financial mechanism to maintain settlements with Iran after the US imposed sanctions.

Add that in November last year, the States imposed additional sanctions against Iran, which covered the export of oil. However, exceptions were made for many countries, and they continue to import Iranian energy resources, so it is difficult to assess the impact.

By the way, Iranian President Hassan Rouhani, speaking before the Iranian Cabinet, said that the country, using various methods of selling its oil, safely bypassed the sanctions and had plenty of such opportunities. And last week, Japan resumed purchases of Iranian oil, said the head of the Central Bank of Iran, Abdolnacer Hemmati, noting that Japan began importing Iranian oil after China, South Korea, India and Turkey.

It should be noted that circumvention of sanctions is possible by using currencies other than the dollar in calculations. For example, Indian refineries began to buy oil from Iran only for Indian rupees.

For the first time since the application of US sanctions against Iran in November 2018, India and Iran began to use only national currencies in the oil trade, excluding payments in euros and dollars from calculations. Reuters reported about this with reference to Executive Director of the Indian state bank UCO Bank Charan Singh, as well as unnamed sources in the oil industry in India.

In the previous period of sanctions pressure from the United States (2012–2016), Iran and India have already carried out a significant part of calculations for the supply of Iranian oil in Indian rupees, but then their share was 45% of the total payments, the rest of the oil trade was carried out in euros.

The international conference scheduled for February 13-14 in Poland, as conceived by the Donald Trump administration, should show global unity and determination to isolate Iran, but instead it can demonstrate alertness and uncertainty among US allies.

European allies are trying to find any excuse to send diplomats of lower rank to Warsaw instead of foreign ministers, and also want, without offending the United States, to change the agenda of the forum, various European sources assert.

Meanwhile, the US envoy to the UN last week once again stated that the main goal of the upcoming meeting is to achieve peace and stability in the Middle East, and not to demonize Iran.

Despite American assurances that the Warsaw meeting will not become an anti-Iranian forum, European diplomats, however, continue to doubt. Among the reasons for their skepticism is that Trump's special representative for Iran, Brian Hook, is in charge of the meeting from the American side.