EU scrambles to create trade vehicle for Iranian oil

EU scrambles to create trade vehicle for Iranian oil

Last month the European Union set out its plans to form a special-purpose body to deal with transactions that include Iranian oil and European goods in a bid to avoid US sanctions on Iran, however the bloc is struggling to create the vehicle as EU members are reluctant to host it in fear of provoking the US.

In September, the EU said foreign ministers of China, France, Germany, Russia and the UK had met with their Iranian counterparts and agreed to create a special purpose vehicle for dealing with Iran.

In a statement at the UN, the EU’s head of foreign policy Federica Mogherini, said: “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.”

However, there have been a number of hurdles to overcome, including that no EU nations wants to host the vehicle.

“No EU government wants to cross the US by having the SPV,” one official said.

Meanwhile, the US has said it will be stringent in enforcing the sanctions on Iran and will prevent these from being evaded by members of the EU or any other country.

US Secretary of State Mike Pompeo described the plans as “one of the most counterproductive measures imaginable for regional global peace and security.”

Although the mechanism will be in place by 4th November, when the sanctions come into effect, it will not be operational until early 2019. However, Europe’s biggest companies are not taking any chances and are actively withdrawing from Iran as a result of the sanctions.

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