INSTEX Is a Long Time Coming
EghtesadOnline: Tehran is not satisfied with the snail’s pace of transactions via the oft-publicized Iran-EU trade channel, said Gholamreza Ansari, deputy foreign minister for economic affairs.
The channel started work in a limited manner in March by importing a cargo of medical equipment from Germany, he said, but “Iran is not content with the transactions conducted via the mechanism,” IRIB news website reported.
Officially known as Instrument in Support of Trade Exchanges (INSTEX), the trade mechanism was set up in January 2019 by France, Germany and Britain, the three parties to Iran’s 2015 nuclear deal, after the United States quit the historic agreement and imposed new sanctions on Tehran in 2018.
INSTEX was designed to bypass the unilateral US sanctions and facilitate trade between Iran and the European Union, and possibly other third parties, to keep the nuclear agreement alive.
Asked by the state broadcaster whether the Europeans have been cooperative in expanding INSTEX transactions, Ansari said, “the European parties are cooperating, but transactions are limited both in the type and volume of goods.”
“The Central Bank of Iran is negotiating for another deal,” the senior official said, adding that the CBI is making efforts to sustain the trade mechanism.
In late March, the foreign ministry in Berlin said France, Germany and the UK processed their first deal with Iran to supply medical supplies using INSTEX.
After a long delay, the first transaction took effect involving export of medicine worth €500,000 ($539,667) by a private firm in Germany to a company in Tehran
In April the German Foreign Minister Heiko Maas said new transactions using the European Union’s financial settlement mechanism would take place soon.
Although medicine and other humanitarian goods are exempt from US sanctions, banking restrictions and threats of secondary sanctions have severely hampered the supply of critical goods because foreign firms, fearing US wrath, exercise extra caution and prefer not to do business with Iran.
INSTEX is set to cover trade of humanitarian goods and only with the EU in its first phase and is not likely to cover other sectors and third parties any time in the near future.
Ansari was hopeful that the channel will make trade exchange between Iran and EU possible in the future by broadening the scale and scope of the mechanism to cover a range of goods.