INSTEX – Instrument In Support Of Trade Exchanges
What is the News?
- Germany, France and Britain have officially set up a European mechanism to facilitate non-dollar trade with Iran and circumvent US sanctions.
- The EU has been preparing the system, in effect a clearing house that avoids monetary transfers in dollars between the EU and Iran for months although it is unlikely to become operational for several months due to technical details.
- France and Germany had taken joint responsibility for the SPV, the European Special Purpose Vehicle (SPV) would be named INSTEX-Instrument In Support Of Trade Exchanges.
What is INSTEX?
- INSTEX-Instrument In Support Of Trade Exchanges
- It is a payment mechanism being setup by the European Union to secure trade with Iran and skirt US sanctions after Washington pulled out of the landmark nuclear deal last May.
- INSTEX will allow trade between the EU and Iran without relying on direct financial transactions.
- INSTEX is registered at Paris with an initial 3,000 Euros in the capital and a supervisory board with members from France and Germany and chaired by the UK.
- It is a project of the governments of France, Germany and Britain and will receive the formal endorsement of all 28 EU members.
Significance of INSTEX
- It is the first concrete step by the EU to counter Trump’s unilateral decision to withdraw from the nuclear deal.
- The launching of INSTEX is not only a matter of Iran-EU relations but also embodies a new approach by the bloc towards US policies.
- It becomes an opportunity when it’s understood as an experiment and as part of a bigger project to strengthen EU economic power.
- US warned EU that any attempt to evade its “maximum pressure” campaign on Iran would be subject to stiff penalties.