EU dependency on US stalling alternative payment channel – Iran

Brussels has still not introduced an independent payment channel to bypass American sanctions against Iran because of dollar dominance and the reliance of the European economy on the US, a top Iranian diplomatic official said.

The European Union vowed to keep doing business with the Islamic Republic after the US withdrawal from the landmark nuclear agreement, signed between Tehran and major world powers, which prompted the re-introduction of punitive measures against Iran last year.

The 28-nation bloc has been working on the creation of a clearing house, known as a special purpose vehicle (SPV), to facilitate financial transactions and non-dollar trade with Iran. In December, the EU’s foreign policy chief said she expected the mechanism to be established before the end of 2018. However, no further significant progress has been made since then.

Meanwhile, Tehran’s patience is wearing thin and it is time for Brussels to take its strategic decision, Iranian Foreign Ministry spokesman Bahram Qasemi warned on Saturday.

“Dollar dominance as well as interconnection of the EU and US economies are among the reasons behind SPV delay,” Qasemi said. He added that the bloc itself is a “captive and hostage of the US economy” and cited Washington’s threats to European companies as another key factor hampering the SPV progress, according to state-run IRNA news agency. 

Despite European politicians’ efforts to assure Tehran that they will stick to the deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), no country has volunteered to host the SPV so far.

The EU also activated legislation to shield EU companies from re-imposed US economic restrictions on Iran. However, the measure failed to prevent European business giants, including Total, Volkswagen, Daimler, Peugeot, Renault and Siemens, from withdrawing from the country.

The US was quick to put pressure on its European allies after they announced their intention to protect trade with the Islamic Republic. In November, US Special Envoy for Iran Brian Hook warned that European banks and firms that engage in the mechanism will be at risk from newly re-imposed US punitive measures.

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