European media sources said that the EU has announced a special plan to set up a payment system that will allow its continuous trade and business ties with Iran. Maja Kocijancic, spokesperson for the EU’s foreign affairs and security policy, stated that the bloc was in the process of putting forward the necessary measures. The new payment mechanism has received support from the five remaining countries that have patrionised the Iranian nuclear deal, including the UK, China, France, Russia and Germany.
Earlier, in his speech on national television, Governor of the Central Bank of Iran (CBI), Abdolreza Hemmati, revealed that Iran and the EU will soon finalise a monetary transaction mechanism in early November. The new payment mechanism is aimed at facilitating the businesses of both sides to maintain cooperation despite the US sanctions, as businessmen will be able to use the channel to transfer money. Iranian President Hassan Rouhani last week claimed that “the US has been abandoned by its traditional allies in the confrontation with Iran” and even the EU is also on the side of Teheran against Washington’s reimposition of sanctions. In a speech at parliament, the Iranian leader emphasised that “a year ago no one would have believed that Europe would stand with Iran and against the US”.
In fact, even though Washington wants to “ban” countries from buying Tehranian oil, three EU nations and signatories to the Iranian nuclear deal, France, the UK and Germany, as well as certain other countries, wish to continue buying Iranian oil via a payment regulation that can “dodge” the US sanctions. In the past few months, after the US withdrew from the nuclear deal between Iran and the P5+1 group (five permanent members of the United Nations Security Council, and Germany), officially known as the Joint Comprehensive Plan of Action (JCPOA), the European governments have pledged to maintain their economic ties with Teheran, especially in the banking sector. The EU also expressed its view that the US’s unilateral withdrawal from the JCPOA was contrary to the requirement for states in the issue of complying with international agreements. Therefore, the European countries need to respect their commitments to the cooperation with Iran. Accordingly, the EU will observe the JCPOA and support companies of its member countries to operate in Teheran. The refusal to impose economic sanctions against Iran is in line with the interests of the EU as the EU is Tehran’s leading trading partner with two-way trade reaching tens of billions of dollars. The EU companies poured tens of billions of dollars into Iran in 2017 after Tehran signed a nuclear deal with the P5+1 group. For example, Airbus has invested £25 billion in Iran, while Peugeot made investments worth millions of euros. As the US announced its sanctions, Iran was also negotiating a US$600 million deal with Hemla Group and a multi-billion dollar deal with the Shell Group.
However, analysts have stated that the implementation of the aforementioned “special payment system” will not be easy at all, especially as the EU countries maintain economic cooperation with Iran, but still want to avoid a direct confrontation with the US. The European media cited several EU officials as admitting that the application will be difficult and that the new mechanism will not be able to work immediately on November 5. Although Iran has repeatedly urged the EU to raise a stronger voice to protect the JCPOA and stand on Teheran’s side in the confrontation with the US, the EU officials seem to be dealing with all the affairs in an irresolute manner. At present, the EU’s plans concerning the Iran issue have been supported by the High Representative of the EU for Foreign Affairs and Security Policy, Federica Mogherini, but are proceeding very slowly.
Thus, the plan to set up a payment system that allows continued trade and business relations with Iran has been announced, but it’s still a risky option. The survival of this plan depends entirely on whether the EU is determined to “bypass the narrow gate” to overcome US financial embargo barriers and foster economic cooperation with Iran or not.
