First INSTEX deal completed, a positive sign in EU efforts to salvage Iran nuclear deal

Wednesday, 2020-04-08 17:34:05
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Iranian firefighters disinfect streets in an effort to stop the wild spread of COVID-19 in Tehran, March 2020. (Photo: EPA-EFE)
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NDO – Iran has welcomed the EU’s implementation of INSTEX, a trade mechanism set up to circumvent US sanctions on Tehran. This is considered a positive sign toward fulfilling the commitments of the “old continent” to Iran, especially as the Islamic nation struggles with mounting difficulties.

However, given the reality of Iran’s serious coronavirus outbreak and the fact that its economy is on the brink of collapse, both an immediate and long-term solution is now required for the Middle Eastern country.

Following Iran’s request and the desire of the international community to help Tehran maintain sufficient resources to cope with the current crisis, the United Kingdom, France and Germany, the three European powers who joined the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal, have conducted their first transaction through the INSTEX mechanism. Accordingly, these countries have facilitated the export of medical goods to Iran, which is currently heavily affected by the COVID-19 pandemic. This mechanism was designed by the European powers to facilitate trade activity between the European Union (EU) and Iran without violating the US sanctions against Tehran. This is considered an attempt to keep Iran in the JCPOA after the US unilaterally withdrew from the deal. Earlier, INSTEX was put to the test by Iran in order to pressure Europe to take more action in fulfilling its commitments to protect Tehran’s interests against US sanctions. The Islamic nation repeatedly criticised European countries for not implementing INSTEX. The latest move is seen as a positive signal in the context of the Iranian nuclear deal being on the brink of collapse and the deadlocked US-Iran talks on the issue.

However, some diplomats said that the INSTEX mechanism has just been activated at a small scale and with a moderate trade exchange volume, mainly involving humanitarian goods and food. Meanwhile, as a country seriously impacted by COVID-19, Iran is in desperate need of commercial, financial and banking services that have been blocked by the sanctions. In an effort to overcome the current difficulties, the Iranian government plans to withdraw US$ 1.08 billion from the national investment fund to cope with the disease. The money will be used to help Iran’s Ministry of Health procure essential medical equipment and strengthen the social security system amid an increase in the number of applications for unemployment benefits. Additionally, the government has allocated a budget of up to US$23.9 billion to support the economy which has suffered the dual losses due to both the sanctions and epidemic.

The EU’s move to promote trade with Iran stems from Tehran’s urgent call and international community pressure in response to the need to lift economic blockade orders to help the Islamic nation deal with the present serious situation. The Iranian Ambassador to Belgium recently called on the EU to counter the US sanctions against Tehran during the COVID-19 outbreaks. Permanent representatives of Russia, China, Syria, Cuba, the Democratic People’s Republic of Korea, Iran, Nicaragua and Venezuela at the United have sent appeals to the UN Secretary-General to lift unilateral US sanctions on a number of countries, including Iran. Even the leading presidential candidate of the US Democratic Party, former Vice President Joe Biden, has called on President Donald Trump’s administration to ease economic sanctions against Iran aiming to help the Islamic nation reduce the pandemic’s damage. Biden said President Trump’s unrelenting pressure on Tehran, through strong sanctions, was counterproductive to a country that always had a tough attitude.

In the face of the international community’s urging, the US announced that it was considering the possibility of loosening sanctions on Iran and some countries, but Washington has not yet shown any specific signs concerning the implementation of the plan thus far. In fact, the US-Iran confrontation still continues with tensions between the two sides concerning the air strikes in Iraq. The European countries’ moves to enhance trade exchange with Iran at this time are considered “valuable rain” to temporarily alleviate the difficulties that Iran is experiencing. However, this is not yet a long-term solution. What the Islamic nation further expects is the European countries’ complete fulfillment of their commitments across numerous areas such as banking, energy and insurance, together with a complete lifting of sanctions by the US. After all, in order to have a comprehensive solution, the US, Iran and other partners participating in the JCPOA need to show goodwill and fully comply with the contents of the historic agreement, as well as resolving all disputes through dialogue.