Daily Management Review

FT: EU fails to circumvent US sanctions against Iran


10/29/2018


The European Union has not yet found a country that would agree to become the jurisdiction of a special purpose vehicle (SPV), through which settlements with Iran will be made after the introduction of US sanctions against the country's energy sector in November, writes the Financial Times. Such an SPV is the main element of the EU’s plan to maintain trade relations with Iran, the newspaper notes.



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“None of the governments of the EU countries wants to cross the United States by hosting the SPV,” one of its sources told the newspaper. “It’s not that countries lined up for SPV,” said another. EU countries fear that the US may take political measures against them in this case, up to sanctions, another diplomat said.

Iran believes that it will be able to continue oil exports to Europe, despite sanctions and problems with the organization of circumventing US sanctions. But even without Europe, Tehran expects to export at least 1 million barrels of oil per day to China and other countries. This is three times less than the pre-production 2.8 million barrels per day, however, it will support the country's foreign exchange earnings at the minimum sufficient level, the FT notes.

At the end of September, the EU announced a plan to create an SPV to ensure legitimate financial transactions with Iran. The United States, in response, said they would not allow it either the EU or Russia or China.

The agreement with Iran on the nuclear program was signed by the six international mediators - five permanent members of the UN Security Council and Germany - in July 2015, under the administration of Barack Obama in the United States. Sanctions were lifted from Iran in exchange for abandoning the military nuclear program. In May 2018, US President Donald Trump, calling the agreement "bad" and accusing Iran of deception, announced that the United States was withdrawing from it.

After that, Washington announced restoration of sanctions against Iran - first against the financial sector (from August 7), and then against the energy sector (from November 5). The second package provides for sanctions against third-country companies doing business with Iran. Until November 5, all such companies, in order to avoid sanctions, must curtail energy cooperation with Iran, in particular, stop the purchase of Iranian oil.

After the restoration of the first package of sanctions against Iran, Trump said that business would have to choose between this country and the United States. "Anyone who does business with Iran will not do business with the United States," the American president stressed.

source: ft.com






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