Russia indicates it may join EU’s Instex mechanism for trade with Iran

By bne IntelliNews July 22, 2019

Russia has indicated it may be willing to process trade with Iran through the EU’s “Instex” payment mechanism devised to protect companies that wish to continue trading with the Islamic Republic from US secondary sanctions. However, it has called on Brussels to expand the mechanism to cover oil exports, according to the Financial Times.

If such a move was made, the US would almost certainly attempt to attack Instex (Instrument in Support of Trade Exchanges) as the number one aim of Washington’s attempt to throttle the Iranian economy to secure concessions on Iran’s nuclear programme and Middle East policy is to drive all Iranian oil exports off world markets.

Iran has complained that the remaining major power signatories of the 2015 nuclear deal—the UK, France, Germany, Russia and China—have done little to help protect its trade and economy from US sanctions, while it has expressed disappointment that Instex has not yet been formulated to enable trade in items which are on the US sanctions list. Its first trades are likely to be limited to non-sanctionable humanitarian goods.

So frustrated has Iran become at the lack of forthcoming economic assistance, particularly where the EU's major powers are concerned, that it has started edging towards the nuclear deal exit door.

Moscow’s involvement in the channel would mark a significant step forward in attempts by the EU and Russia to rescue the nuclear deal, now in danger of unravelling fast following the Trump administration’s unilateral abandonment of it in May last year.

“Russia is interested in close coordination with the European Union on Instex,” the Russian foreign ministry told the Financial Times. “The more countries and continents involved, the more effective will the mechanism be as a whole.”

The Russian foreign ministry was also cited as saying “the full potential of Instex will only be able to be deployed if it will be open to the participation of countries which are not members of the European Union”.

The ministry also said Instex was “a good tool in the implementation of projects . . . that the United States has strongly torpedoed”.

“If the encouraging statements by the EU . . . will be backed up by concrete steps and practical advances, including in relation to the use of Instex for servicing trading in Iranian oil, it will help stabilise the difficult situation created around the JCPOA,” it added.

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