In an article published by The New York Times on Monday, it is said that the Instrument in Support of Trade Exchanges (INSTEX) is a prime example of the futility of Europe’s struggle for strategic autonomy from the United States.
Ever since U.S. President Donald Trump withdrew from the Joint Comprehensive Plan of Action in May 2018, European countries have struggled to come up with an appropriate response, says the article.
The European Union, including Germany, has pledged to uphold its commitment to trading with Iran, it added.
“But Europe has had a hard time living up to this promise,” the paper said.
It also said, “The enormous impact of America’s secondary sanctions comes not just from the market power of the United States, but also from the power of the dollar and America’s capacity to legally or factually control financial transaction systems.”
“One key, then, to Europe obtaining ‘strategic autonomy’ in international relations, is obtaining a capacity for independent financial transactions. Which brings us back to INSTEX,” it added.
“INSTEX — stay with me here! — is part of a barter system that is intended to avoid payments being exchanged directly between European and Iranian companies when they do business with one another, in order to avoid setting off American sanctions. Under this barter system, money doesn’t have to ‘cross’ the invisible line between Europe and Iran: INSTEX and its Iranian counterpart record the value of shipments from Europe to Iran, and vice versa, and organize the exchange of the appropriate amount of funds among exporters and importers on the same side of the line.”
“Sound complicated? It is. And while it works on paper, it’s proved extremely hard to realize in the real world. Policymakers in Berlin admit freely today under the condition of anonymity that they had underestimated the technical difficulties,” the article said.
INSTEX has been designed by the European Union to facilitate legitimate trade with Tehran. It was introduced on January 31, 2019, by France, Germany, and Britain, the three countries party to the nuclear deal.
INSTEX is supposed to be a financial channel and a special mechanism for transferring money in spite of U.S. sanctions on Iran. Its objective is to facilitate Iran's transactions with European companies.
On March 20, Iran’s central bank governor Abdolnaser Hemmati announced that a mechanism similar to INSTEX has been registered in Iran, officially called the Special Trade and Finance Institute (STFI).
Iranian Deputy Foreign Minister for Political Affairs Abbas Araghchi said in November that INSTEX has not been yet fully implemented.
“This financial system was suggested too late and [it] operates at a low level. It has not been yet fully implemented,” Sputnik quoted Araghchi as saying.
Hossein Amir Abdollahian, a senior advisor to the Iranian Parliament speaker, said in November that INSTEX lacks locomotive engine to start working.
“There is no hope for the implementation of the JCPOA by the Europeans. In fact, the U.S., Britain, France, and Germany have agreed on the partitioning mission of weakening the Islamic Republic. INSTEX lacks locomotive engine too,” Amir Abdollahian wrote on his Twitter account.
Russian Foreign Minister Sergei Lavrov has said the INSTEX mechanism still remained on paper.