EU will set up payment system to keep dealing with Iran

The ship is one of at least seven tankers carrying Iranian oil that have gone rogue, The Financial Times has reported, in what appears to be a move by Tehran to sidestep upcoming sanctions by hiding the identity of its buyers and "reverting to an old playbook of selling [oil] in secret" as Iran did to evade past trading embargoes.

European Union foreign policy chief Federica Mogherini announced the plan after talks at the United Nations with the remaining members of the accord - Britain, China, France, Germany, Russia.

The European Union said Monday its members would set up a payment system to allow oil companies and businesses to continue trading with Iran in a bid to evade sanctions after the United States withdrew from a nuclear agreement.

On Thursday, Trump called on OPEC to lower prices, after benchmark Brent oil reached $80 a barrel, mainly stemming from a decline in exports from Iran, because of fresh US sanctions.

They also said that they wanted to "protect the freedom of their economic operators to pursue legitimate business with Iran".

Appearing alongside Iranian Foreign Minister Mohammad Javad Zarif at the UN, European Union foreign policy chief Federica Mogherini read out a joint ministerial statement following a meeting with the foreign ministers of France, Germany, Britain, China and Russian Federation. Several European officials said the new system has been created, which is akin to the barter system.

Mogherini said the decision to establish the mechanism "has been taken" and that technical experts from European Union member states would now be convening to turn it into reality.


FILE PHOTO: An Iranian flag flutters in front of the International Atomic Energy Agency (IAEA) headquarters in Vienna, Austria, January 15, 2016. USA officials say they are ramping up pressure on allies and adversaries alike with a goal of shutting down all Iranian oil and gas exports by November 4, following Mr. Trump's decision to pull out of the worldwide nuclear accord with Tehran in May.

Federica Mogherini, EU's foreign policy chief, told reporters after the deal was announced that the SPV gives EU member states "a legal entity to facilitate legitimate financial transactions with Iran.and allow European companies to continue to trade with Iran in accordance to European Union law and could be open to other partners in the world".

Many diplomats and analysts, however, are sceptical such a vehicle could ultimately thwart US sanctions given that the United States could amend its sanctions laws to prohibit such barter transactions.

Iran has not requested a meeting with the U.S. president, a spokesman for Iran's mission to the United Nations said on Tuesday.

Highlighting just how hard it will be for the Europeans to come up with concrete solutions, French state-owned bank Bpifrance on Monday abandoned its plan to set up a financial mechanism to aid French companies trading with Iran.

Trump considered it flawed because it did not include curbs on Iran's ballistic missiles program or its support for proxies in Syria, Yemen, Lebanon and Iraq.

The impending return of USA sanctions has contributed to a slide in Iran's currency. The rial has lost about two-thirds of its value this year, hitting a record low against the USA dollar this month.


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