Last Thursday, January 31, the ministers of Foreign affairs from France, Germany and the United Kingdom announced, through a joint declaration, the creation of INSTEX SAS (Instrument for Support Commercial exchanges) the new special purpose vehicle created to facilitate legitimate trade and payments between European companies and Iran.
The creation of this new special purpose vehicle immediately received the approval of the high Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini.
With the creation of this new vehicle, Europe reaffirms its efforts to preserve the provisions of the Joint Comprehensive Action Plan (JCPOA), also known as the Nuclear Agreement. This vehicle will allow European companies to continue their trade with Iran, facilitating payments transactions despite the sanctions of United States.
The INSTEX will take shape through a fund in which it will receive the payments intended to finance trade operations between Iran and the EU countries, without the need to resort to transactions with financial entities
The vehicle will initially focus on the most essential sectors for the Iranian population, such as
Pharmaceuticals products, medical devices and agri-food products. However, the diversification of the sectors in a second phase of implementation of the mechanism is not excluded
Initially its shareholding will be in the hands of France, Germany and the United Kingdom. However, companies from all EU countries will benefit from it. In addition, in the future, its services are expected to extend to third countries that wish to trade with Iran.
INSTEX will be governed by the laws of the European Union and will operate under the highest international standards regarding money laundering, the fight against financing of terrorism and compliance with sanctions of the EU and the UN. The currency to be used will be the euro, and may include sterling in the future.
The vehicle will be characterized by the sovereign participation of the shareholders and by the management of the high officials of those countries. Although the initial idea was that it would be controlled by an international organization, it will finally be located in France and run by the German banker and former manager of Commerzbank, Per Fischer. The supervisory board will be composed of diplomats from the three countries: Miguel Berger of Germany, Maurice Gourdault-Montagne of France and Simon McDonald of Great Britain.
Although the mechanism has already been designed, the implementation will not be imminent. It is expected that in the coming months the necessary measures will be taken in order to designing the operational and functioning details.
Authors: José María Viñals and Tania Esparza