EU’s SPV to shield Iran trade from US sanctions to be “symbolically ready” on eve of Trump oil embargo

EU’s SPV to shield Iran trade from US sanctions to be “symbolically ready” on eve of Trump oil embargo
EU foreign policy chief Federica Mogherini has said the European bloc is determined to protect the freedom of its economic operators to pursue legitimate business with Iran.
By bne IntelliNews October 25, 2018

The proposed European Union special purpose vehicle (SPV) to facilitate remuneration for Iranian exports should be legally in place and “symbolically ready” by November 4, one day before the US steps up its sanctions drive against Tehran with the start of an attempted embargo on crude shipments from Iran, Reuters reported on October 24.

The SPV mechanism is designed to circumvent secondary sanctions under which Washington can cut off from the US financial system any bank that facilitates oil transactions with Iran and go after companies or individuals involved in such trade. According to information already provided by the EU, the SPV would enable bartering to avoid the need for cash transactions, while there would be no transparency over who was using the system.

In its most basic form, the SPV would ensure that Iranian oil bought by the EU, UK, Norway and Switzerland could be paid for with European goods shipped back to Iran. Plans to allow non-European countries to utilise the SPV for trading with Iran are reportedly under consideration. EU foreign policy chief Federica Mogherini jointly announced the payment system with Russian and Chinese officials in New York during UN General Assembly Week in late September.

“We’re trying to put the SPV in place before November 4 and are pretty confident we can do it,” one EU diplomat said, according to the news agency. “It won’t be operational immediately. It will take time and the time that takes will be months.”

So far, the physical location of a head office and other issues still had to be worked out, the diplomat added.

Clarifying the situation, a second diplomat said "everything was in place to have a symbolic start date" to show Tehran that the EU was meeting its promises. “We need to demonstrate to the Iranians that we are working to uphold the [nuclear] agreement in the face of US sanctions, to keep them in [the accord], but also saying that we can only move so far, so fast,” a third diplomat said.

Related Articles

Turkish lira sags to 7.64 as analysts predict more backdoor tightening rather than formal rate hike

The Turkish lira hit its latest all-time low—of 7.6408 to the dollar—on September 21 against a backdrop in which analysts were predicting that Turkey’s central bank will stick with backdoor ... more

Erdogan ‘shuns Uyghurs as China provides support to ease Turkey’s economic crisis’

The reality of Turkey’s crisis-stricken economy and the financial support China provides to ease its bite have caused Turkish President Recep Tayyip Erdogan to in recent times make no more than ... more

Veteran trader shorts Eurozone debt on expectation European banks will soon be hit by Turkey’s market ructions

The head of macro strategies at Record Currency Management, which oversees $63bn in assets, is reportedly shorting government bonds of Spain, France and Italy—as well as the euro itself—on the ... more

Dismiss