The European initiative (sometimes called the “special purpose vehicle” or SPV) aims to facilitate financial transactions between Europe and Iran in Euros rather than the US in the hopes that this will allow trade to continue so that Iran could still reap all the benefits from the nuclear deal, despite US sanctions. The main problem is that this agreement would still violate US sanctions, according to experts.
Another major problem is that, given a wave of foiled, Iran-orchestrated terror plots on European soil, including in Albania, France, and Denmark, relations between EU member states and the Iranian Regime have become tense, to say the least. This has also led to no European company being willing to host the SPV’s headquarters.
Not to mention that, even if those countries did come on board, the EU still couldn’t present this to the US as one of the US’s demands was that Iran stops supporting terrorist entities. But Iran can’t stop. The Iranian Regime needs to try to annihilate its opposition in exile, the People’s Mojahedin Organization of Iran (PMOI / MEK), in order to make the group seem insignificant to the Iranian people, who are taking part in nationwide MEK-led protests.
The SPV was introduced by EU foreign policy chief Federica Mogherini a few months ago, but the idea of it wasn’t enough to stop European companies pulling out of Iran en-masse. Now it’s facing many obstacles as experts try to understand how the SPV will allow Europeans to purchase Iran’s oil and gas without being subjected to US secondary sanctions.
Even those media outlets prompting a return to the nuclear deal and appeasement of the Iranian Regime are sceptical of how this will work, indicating that the SPV is nowhere near functional.
The New York Times wrote: “Officials have said they are watching such engineering attempts closely, although few economists and officials in Europe believe such efforts will offer Tehran much in the way of sanctuary from American penalties immediately.”
Businesses are even more sceptical, which is likely why so many have already pulled out. The SPV does not protect against US sanctions as it cannot replace the SWIFT global messaging system and therefore still leaves companies reliant on the US financial system.
Alex Beard, chief executive for oil and gas at Glencore, said: “The European payment mechanism doesn’t shield you if you use the US financial system … you can pay but don’t expect to be on their Christmas card list.”
To make matters even tenser, the Iranian Regime’s Foreign Minister Mohammad Javad Zarif and his deputy Abbas Araqchi have complained that the nuclear deal no longer offers Iran any benefits, which indicates that they might well pull out.
Especially as the SPV does not even have a timetable for its launch yet and no one knows how it will actually work.