After months of effort in its design, the European Union unveiled its Instrument in Support of Trade Exchanges (INSTEX), the new financial system through which trade can take place between European companies and Iran.
Based in Paris and managed by former Commerzbank head Per Fischer, the INSTEX will get its start selling food, medicine, and medical devices to Iran,with an eye toward expanding it to broader trade in the future.
It is a basic clearing house, by all indications, a payment channel that allows Iran to sell oil to Europe and buy things from Europe without having to touch the international banking system. US sanctions make the banks too dangerous to use.
The US is unsurprisingly unhappy with the plan, and threatening to punish any Europeans who try to use the system, which is perfectly legal within the EU. Since the EU nations all remain in the P5+1 nuclear deal with Iran, they were obliged to try to allow trade to continue to happen despite US threats.
US officials seem to be gambling that the European companies will be too afraid of American wrath to even try to trade with Iran, even with this new system set up to let them. They are thus acting as if the new system doesn’t exist, and just reiterating existing threats not to trade with Iran in defiance of US demands.
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