0115 GMT October 21, 2018
The new EU special payments channel devised to maintain business is viewed by many observers as a step in the right direction to save the 2015 Iran nuclear deal, which at the same time underlines the bloc’s desire to say ‘no’ to US bullying.
The last week’s announcement of the European Union's foreign policy chief Federica Mogherini to establish a payments mechanism which allows countries to transact with Iran while avoiding US sanctions has angered US President Donald Trump and his team at the Department of the Treasury.
Called the "special purpose vehicle" (SPV), this mechanism would aim to "assist and reassure economic operators pursuing legitimate business with Iran," according to a joint statement released by Mogherini and Iranian Foreign Minister Mohammad Javad Zarif after a meeting by the remaining members of the Iran nuclear deal — France, Britain, Germany, Russia and China — at the UN in New York.
"This will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," Mogherini said.
The SPV has the potential to gradually become a trading system for Iran and the EU, something that can lure other countries like China and Russia to jump on the bandwagon as well without the fear of being punished by the US sanctions.
Washington is now trying to counter the EU payment mechanism, but the US officials are worried that they will not be able to do so without a direct confrontation and face-off with Europe.
White House officials maintain that the European countries have undermined Trump’s anti-Iran policies by coming up with the mechanism which is aimed at maintaining business ties with Iran to encourage it to stay in the nuclear deal – officially known as the Joint Comprehensive Plan of Action (JCPOA) – after the US abandoned the accord in May.
The European’s opposition against the Trump’s stances vis-à-vis Iran was on display when the French President Emanuel Macron told US president at a UN Security Council session he was chairing that Paris is not on the same page with Washington when it comes to Iran’s sanctions.
Trump vowed at the meeting that US re-imposed sanctions on Iran will be “in full force” and urged world powers to work with the United States to isolate Iran.
Addressing the council after Trump, Macron hit back, declaring that concerns about Iran cannot be tackled with “a policy of sanctions and containment.”
“What will bring a real solution to the situation in Iran and what has already stabilized it? The law of the strongest? Pressure from only one side? No!” Macron said in his address.
US deeply disappointed
Secretary of State Mike Pompeo told a gathering of the so-called “United Against Nuclear Iran” in New York that he was “deeply disappointed” that the remaining countries in the nuclear deal plan to set up a special payment system with Iran to bypass US sanctions.
He also condemned the plan as "one of the most counterproductive measures imaginable".
According to a report published by the New York Post, Trump should now adopt a policy that also takes into consideration the anti-sanctions policies of the European Union. The report says that the EU has now assured Iran and other countries that the bloc can counter the US sanctions.
Analysts now believe that the US may resort to force the SWIFT financial messaging system, which underpins many international transactions and is based in Belgium, to stop doing any business with Iran. However some US officials are of the opinion that even cutting Iran off SWIFT will not stop Iranian banking ties with outside altogether.
The main hurdle in the way of White House approach toward Iran is now the EU solutions that aims to keep doing business flowing with Iran by sidestepping the dollar-dominated international banking system.