EU and Iran agree on new payment system to skirt U.S. sanctions

September 25, 2018 - 12:25

In a major snub to the United States, the European Union (EU) has decided to set up a new mechanism to enable legal trade with Iran without encountering U.S. sanctions. 

The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc's foreign policy chief announced late on Monday, in a bid to evade U.S. punitive measures.

Mogherini's announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York. 

"In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," she told reporters after the closed-door meeting.

The Trump administration withdrew from the nuclear agreement earlier this year and reimposed sanctions on businesses dealing with Tehran.

The European Union, along with Russia and China, said in a joint statement that the so-called "Special Purpose Vehicle" will "assist and reassure economic operators pursuing legitimate business with Iran."

The statement added the six countries that signed the 2015 nuclear agreement "reconfirmed their commitment to its full and effective implementation in good faith and in a constructive atmosphere."

Known formally as the Joint Comprehensive Plan of Action (JCPOA), the Iran nuclear deal ended a nearly 12-year stand-off between Iran and Western powers in 2015. 

It was spearheaded by the Obama administration and saw the lifting of international sanctions.

A second round of U.S. sanctions is expected in November, aimed at putting a stranglehold on Iranian oil exports. 

The EU, U.S. allies, and the international nuclear watchdog, IAEA, maintain that Iran continues to abide by the terms of the agreement.

(Source: Al Jazeera)

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