by Will Racke
The European Union, China and Russia have agreed to establish a special financial channel that will allow them to continue trading with Iran while avoiding U.S. sanctions.
Announced by EU foreign affairs chief Federica Mogherini and Iran’s Foreign Minister Javad Zarif in a news conference late Monday, the “special purpose vehicle” aims to facilitate payments connected to Iranian oil exports and imports from trading partners.
The announcement was a rebuke of U.S. President Donald Trump’s efforts to isolate Tehran through direct sanctions and secondary penalties against foreign entities that do business with it. Trump re-imposed the Iran sanctions in May when he withdrew the U.S. from the 2015 Iran nuclear deal, against the wishes of the deal’s other parties — Britain, France, Germany, Russia and China.
“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 trade with Iran,” Mogherini said after meeting with diplomats from the other signatories, according to Bloomberg.
Mogherini went on to say the details of the financial arrangement were still being worked out, but that it would “reassure economic operators pursuing legitimate business with Iran.” Dozens of major European companies have suspended or withdrawn operations in Iran in recent months due to the threat of U.S. sanctions.
Monday’s announcement came the night before Trump was scheduled to deliver an address to the U.N. General Assembly (UNGA) in New York. He is expected to discuss Iran sanctions during the speech and at a U.N. Security Council meeting he will chair on Wednesday.
Trump said on Twitter Tuesday morning he had no plans to meet with his Iranian counterpart, President Hassan Rouhani, during the UNGA conference. He left open the possibility of a future meeting with Rouhani, writing that he was sure the Iranian leader is “an absolutely lovely man.”
Leading up to this week’s UNGA conference, Iran had been demanding the EU do more to maintain economic ties despite pressure from Washington. Tehran has says it has no reason to stay in the nuclear deal if can’t reap the economic benefits that came from the lifting of international sanctions.
Brussels has been weighing options for a special financial arrangement with Iran since the U.S. exited the nuclear deal and reimposed sanctions. In that time, Iran’s economy has faltered due to plummeting oil exports and the collapse of the Iranian rial against the dollar.
“To keep the deal alive we need concrete solutions so that payment channels can be kept open and trade with Iran remains possible,” German Foreign Minister Heiko Maas said after the meeting in New York. “We’re working hard on this with our European partners.”
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