PARIS/BERLIN: Germany, France and Britain have officially set up a European mechanism to facilitate non-dollar trade with Iran and circumvent US sanctions, two diplomats said on Thursday.
The EU has been preparing the system, in effect a clearing house that avoids monetary transfers in dollars between the EU and Iran for months although it is unlikely to become operational for several months due to technical details.
German broadcaster NDR reported that the European Special Purpose Vehicle (SPV) would be named INSTEX-Instrument In Support Of Trade Exchanges.
The idea is for the SPV to help preserve the economic benefits for Iran derived from the curbs it placed on its nuclear program under a 2015 deal with world powers.
Europe has been keen to show good faith toward Iran since U.S. President Donald Trump withdrew from the deal last year.
The entity is not likely to revive trade with Iran to begin with as its focus will primarily be food, medicine and humanitarian, with transactions small. It will not be used for oil-related transactions that have been hit hard by U.S. sanctions.
