Mar 6, 2021, 1:18 PM
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INSTEX and damaged European prestige

London, March 6, IRNA – After two years of Europeans' political gesture to honor the JCPOA-related commitments through Instrument in Support of Trade Exchanges (INSTEX), the institution's chairman finally admitted its failure, damaging the European prestige.

The INSTEX was a mechanism developed by three European participants of the JCPOA, i.e. Britain, France and Germany, to facilitate Iranian bank transactions with European companies away from the US sanctions.

The instrument, since its inception, has been used by Europeans as a proof of their commitment to the JCPOA, a deal meant to limit Iran's nuclear program in return for economic benefits but cut-off after the US ceased its participation in 2018, resuming sanctions against Iran in total disregard of the UN Security Council Resolution 2231.

However, Europeans' gesture of honoring their commitments to the JCPOA after US withdrawal came to a bitter end when the German-appointed president in INSTEX Michael Erhard Bock admitted its failure in an online Iran-Europe trade conference last week.

As the third president of the doomed-to-fail European initiative, Bock, avoiding exposure to the media for several months, finally said in the conference big European banks didn't cooperate with INSTEX, fearing US punishment.

European banks are under pressure by the US government and have to report transactions, he said, adding that banks, to his astonishment, prefer not to do business with Iran.

A former German diplomat, Bock said that they have been trying to earn their trust for two years since inauguration of INSTEX and continue to do so, adding, "in the meanwhile, we continue to work with small banks who are active in the market."

The instrument, established to connect small and medium-sized European companies to Iran, was initially expected to facilitate trading of sanctioned goods, but it was allocated to humanitarian goods in the first stage.

Based in Paris, INSTEX was headed by former Commerzbank partner Per Fischer. After his resignation, former German Ambassador to Tehran Bernd Erbel was nominated to hold the post, but he withdrew and Bock was finally appointed to the post.

Bock said that INSTEX with its Iranian mirror body, STFI (Special Trade and Finance Instrument), managed to establish a cost-effective model of trade between Iran and Europe that can manage up to 700 million Euros.

Recently, a German official had wrongly put the blame for failure of INSTEX on Iran, saying that Tehran refused to trade with 'numerous European companies willing to cooperate with the instrument.'

Central Bank of Iran at the time denied the claim, writing in a tweet that the instrument failed because 'Europeans weren't brave enough to apply their independent, sovereign economic power, and they couldn't find a way to finance the instrument.'

The CBI also said that the INSTEX was set to facilitate Iran-Europe trade regardless of US sanctions, not to operate under sanctions.

This was confirmed by Bock in his speech in Europe-Iran Business Forum, as he said that Iran announced it was not seeking a European 'gift' in the first place.

Although disappointing, Bock's remarks are concrete proof of inaction from European side in fulfilling their commitments to the JCPOA, despite their numerous political statements.

Iran, in its turn, chose to practice its rights enshrined by in the JCPOA and reduced its compliance with it in a phased process, but in the meantime stressed that the process is reversible only after Iran sees practical measure from European parties in saving Iran's economic benefits.

Iran's Supreme Leader Ayatollah Khamenei recently said the last word, stating that Iran would return to full compliance with the JCPOA, when the US lifts all the criminal sanctions in practice not on paper and Iran has the right to verify the US overture.

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