The European Union will set up a payment mechanism to secure trade with Iran and oppose US sanctions after Washington has withdrawn from its landmark nuclear deal.
The proposal for a financial instrument was a key element of the EU's strategy to prevent Iran from ending the 2015 nuclear agreement, which was signed to curtail its nuclear activities in exchange for sanctions.
The new institution INSTEX – Instrument In Support Of Trade Exchange – allows trade between the EU and Iran without relying on direct financial transactions. It is a project of the governments of France, Germany and the United Kingdom and is formally endorsed by all 28 EU members.
US President Donald Trump's administration has been warning European efforts to set up the funding mechanism to warn that any attempt to escape the "maximum pressure" campaign against Iran will be severely punished.
The mechanism is the EU's first concrete move to oppose Trump's unilateral decision to withdraw from the nuclear deal in May.
Not too late?
INSTEX is initially used for non-sanctionable trade, including humanitarian goods such as medicine, food, and medical devices. Some have wondered if it will work.
"If [the mechanism] remains permanently restricted to exclusively humanitarian trade, it will be obvious that Europe will not live until its end of trade with Iran," political analyst Mohammad Ali Shabani told Al Jazeera. [1
"I do not believe that the EU is either willing or able to withstand Trump's threat, " he said. "The EU is not taking the nuclear deal seriously, and no action is being taken to prove Iran in any other way … People are lacking in patience."
According to Esfandyar Batmanghelidj, founder of a Europe-Iran company Forum, the role of the new payment channel should not be undermined by the crucial role that drugs play as a trade category between Europe and Iran.
In 2017, exports of medicines from Europe to Iran totaled $ 884 million compared to $ 194 million from China and $ 52 million from India Information from the United Nations.
As Batmanghelidj pointed out, the mechanism, although limited, could pave the way for further progress.
"It is of value to give the EU the opportunity to learn how to work properly, and then [a mechanism] to create more strategic sectors." It could become a pilot project facing the US focus on their humanitarian attitude is difficult to achieve with political legitimacy, "said Batmanghelidj.
"What appears as a limitation could turn into a strength."
Opportunity for EU
 The sentence INSTEX is not just a matter of relations between Iran and the EU, but also embodies a new approach of the block against the US policy to Batmanghelidj.
INSTEX " will be an opportunity if understood as an experiment and part of a larger project to strengthen the EU's economic power," he said.
"In this case, it is important to see that, despite the problem, the EU is doing something US and US positions, which is something new."
EU leaders will German: www.socialistgroup.eu/gpes/sessiond…04&place=STR The impact of secondary US sanctions on US companies is becoming clearer and they are becoming aware of the need to strengthen the eurozone, said German Chancellor Angela Merkel in her report . Speech in Davos at the recent World Economic Forum .
"This [mechanism] is at best a small step in the direction of international financial structures that would give the EU more independence," said Henry Farrell, a professor of political science at George Washington University, in Social Media Contribution
In the meantime, Iranians are waiting for the salvation of their European partner nuclear agreement. However, when [19659-09] Ali Akbar Salehi the head of Iran's nuclear power organization warned recently, the EU must move "ahead of the late".
"We [Iran] will lose confidence and once the trust is lost, everyone will be a loser in the game," Salehi said.