Iranian Foreign Mohammad Javad Zarif welcomed a "long overdue first step” taken by the European signatories to the nuclear deal to launch a direct payment mechanism meant to bypass Washington’s sanctions on Tehran.
"We remain ready for constructive engagement with Europe on equal footing & with mutual respect," the top Iranian diplomat tweeted on Thursday shortly after Germany, Britain and France announced launch of the mechanism.
Iran welcomes #INSTEX — a long overdue 1st step — in E3 implementation of May 2018 commitments to save JCPOA by ensuring dividends for Iranians after US’ illegal reimposition of sanctions. We remain ready for constructive engagement with Europe on equal footing & with mutual respect, Zarif tweeted.
Following months-long preparations, foreign ministers of France, Germany and Britain finally unveiled the mechanism – officially called the Instrument in Support of Trade Exchanges (INSTEX) – on Thursday following a summit in Bucharest.
"France, Germany and the United Kingdom, in accordance with their resolute commitment and continued efforts to preserve the Joint Comprehensive Plan of Action (JCPOA) endorsed by United Nations Security Council resolution 2231, announce the creation of INSTEX SAS (Instrument for Supporting Trade Exchanges), a special purpose vehicle (SPV) aimed at facilitating legitimate trade between European economic operators and Iran," the three foreign ministers said in a joint statement.
Brussels hopes the long-awaited special payment system will help save the Iran nuclear deal by allowing Tehran to keep trading with EU companies despite Washington reimposing sanctions after President Donald Trump quit the accord last year.
While the new institution, is a project of the three governments, it will receive the formal endorsement of all 28 EU members.
The company was registered in Paris on Tuesday with an initial 3,000 euros in capital and a supervisory board with members from France and Germany, and chaired by a Briton.
Europe-Iran legitimate trade
"INSTEX will support legitimate European trade with Iran, focusing initially on the sectors most essential to the Iranian population – such as pharmaceutical, medical devices and agri-food goods," the foreign ministers of Britain, Germany and France – Jeremy Hunt, Heiko Maas and Jean-Yves Le Drian – said in the statement.
In the longer term, INSTEX aims to be open to third countries wanting to trade with Iran, the statement said – an ambition unlikely to please Washington.
Iran will also need "to create an effective and transparent corresponding entity that is required to be able to operationalize" the mechanism," the statement added.
French FM: INSTEX a political act
"It is a political act," French foreign minister told reporters, adding, "It is a gesture to protect European companies."
For his turn, Britain's foreign secretary said the three countries were working closely with Tehran to finalize arrangements.
"Registration is a big step, but there is still more work to be done," Hunt said.
Hunt said the move was "a clear, practical demonstration" of Europe's commitment to continuing the nuclear deal.
Earlier in the day, Iranian Deputy Foreign Minister Seyyed Abbas Araqchi described the launch as "the first of a set of commitments to Iran that the Europeans must fulfill," expressing hope that mechanism will not be left incomplete.
The payment system, he said, could "fully meet our interests only when it is accessible to non-European firms and countries...so it could cover our entire international purchases," adding that this feature "is apparently slated to be realized in the next phase."
Details about how the mechanism functions will be put to talks in the future expert-level meetings between Iran and Europe, Araqchi added.
EU diplomatic chief Federica Mogherini, who has led the bloc's efforts to save the nuclear deal, said INSTEX was "essential for the continued full implementation of the nuclear deal".
INSTEX is not yet operational and needs Iran to set up a parallel structure of its own, a French government source told AFP – something which may take some time to complete.
While it is aimed at small and medium sized companies, the French source said it would send an important message to Iran about Europe's commitment to keep the nuclear deal alive.
"We have to try to reduce the effects of Trump's decision," the source said.
"It is not a primarily commercial move but a strategic one."
Confronting US extra-territorial sanctions
For some in the EU, INSTEX represents the start of a European fightback against Washington's swingeing extra-territorial sanctions – which are enabled by the dollar's role as the world's dominant reserve currency.
Washington has warned the EU against trying to sidestep its sanctions on Tehran, while the Europeans – along with the deal's other signatories Russia and China – say Iran has not broken its side of the nuclear accord and should be allowed to trade.
The UN atomic agency has certified Iran's compliance with its obligations 13 times and even the head of the CIA said this week that Tehran was abiding by the accord – drawing a furious response from Trump.
A number of countries across the world announced their support for the INSTEX and promised to cooperate with the EU financial payment mechanism.
Russia will cooperate with the European countries actively to develop the INSTEX with Iran, Russia's Permanent Representative to International Organizations in Vienna Mikhail Ulyanov in the Austrian capital, Vienna, said.
China seriously supports the efforts made by European countries to set up the INSTEX with Iran and preserving Iran nuclear deal, Chinese Foreign Ministry spokesman Geng Shuang said.
Chairman of the UK-Iran Chamber of Commerce Lord Norman Lamont welcomed establishment of the INSTEX between Iran and Europe.
Turkish Foreign Minister Mevlüt Çavuşoğlu said Europe's setting up the INSTEX with Iran is a positive move, adding the US sanctions do not concern Iran only, rather cover wide spectrum of countries, ranging from Europe to Japan.
Belgian Foreign Minister Didier Reynders declared his country's support for setting up of the INSTEX with Iran.
Austrian Foreign Minister Karin Kneissl expressed support for presence of the European small and medium-sized enterprises (SMEs) in Iran.