Europe Launches SWIFT Alternative To Fund Iran In Collision Course With Trump
In a move sure to unleash fury from the Trump administration, the European Union has announced it has set up a transactions channel with Iran to bypass US sanctions. The launch of INSTEX — or “Instrument in Support of Trade Exchanges” — by France, Germany, and the UK will allow non-dollar trade with Iran and is being described as facilitating humanitarian goods-related transactions only, including food, medicine and medical equipment.
Long anticipated, Thursday’s EU announcement marks the most concrete action Europe has taken to thwart Washington sanctions after the US pullout of the 2015 nuclear deal last May, and after SWIFT caved to US pressure. Europe is hoping the mechanism will act as a legal means to preventing Tehran from quitting the JCPOA, which promised sanctions relief should the country halt nuclear weapons research and development. INSTEX is expected to receive the formal endorsement of all 28 EU members, which aims to encourage skittish pharmaceutical and agricultural companies to the table with Tehran after many stopped doing business in Iran for fear of US economic retribution.
The Iranians welcomed the new mechanism: “It is a first step taken by the European side… We hope it will cover all goods and items,” Iranian Deputy FM Abbas Araqchi told state TV, referencing EU promises to stick to its end of the nuclear deal.
INSTEX will reportedly be based in Paris and run by a supervisory board chaired by the UK and managed by a German banking expert, and has further been described in European media as “expandable,” which is likely to provoke a reaction from the United States, especially after Washington was able to pressure the Belgium-based SWIFT financial messaging service to cut off the access of Iranian banks.
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