Draft EU document leaked on how to circumvent US sanctions on Iran

The Special Purpose Vehicle (SPV) for Iranian trade is ready to launch

This photo provided Friday, Jan. 25, 2019, by the Iranian Army shows an infantry drill in the central Isfahan province, Iran. AP

A joint EU statement is imminent on the new payment mechanism to circumvent the sanctions imposed by the US on Iran following Washington’s withdrawal from the 2015 deal on Tehran’s nuclear programme.

The official unveiling of the Special Purpose Vehicle (SPV) is slated for the start of this week, if all 28 member states were to agree on the draft statement.

The initiative – spearheaded by France, Germany and the UK – got the greenlight from Italy, according to a draft communique. However, Spain has so far objected to the wording of the document.

A copy of the EU communique seen by Bloomberg News welcomed the three-nation initiative as providing “a positive impact on trade and economic relations with Iran, but most importantly on the lives of Iranian people.”

SPV is designed to shield European companies keen to do business with Iran from US sanctions that could result from dollar-based transactions.

Iranian Foreign Ministry Spokesman Bahram Qassemi on Sunday called on the EU to stay committed to their promise of launching SPV.  Mr Qassemi lamented the delay in launching the tool and called on the Europeans to show their independence from the US.

Deputy Foreign Minister Seyyed Abbas Araqchi set off for Europe on Monday morning to negotiate with Austrian, Slovak and Bulgarian officials.

The Trump administration branded the initiative an attempt to evade its “maximum pressure” campaign against Iran and questioned whether it will work. Sigal Mandelker, the Treasury’s top sanctions official, said in December she wasn’t concerned “at all” that the EU initiative could side-track US efforts.

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“I think the bigger news in Europe is that companies are withdrawing from Iran in droves,” Mrs Mandelker told reporters.

“I am not concerned by the SPV actually at all. I do believe we are going to find additional mechanisms by which we can work together.”

France, which has been one of the promoters of the European-backed system to facilitate non-dollar trade with Iran, insisted last week that the approval of SPV would be conditional to Tehran reining in its missile activity.

“We are ready, if the talks don’t yield results, to apply sanctions firmly, and they know it,” French Foreign Minister Jean-Yves Le Drian told reporters.

In response, Iran’s Foreign Ministry spokesman Bahram Qasemi said that “our missile capability is not negotiable ... we have repeatedly said that during our political talks with France.”  according to the Iranian state news agency (IRNA).

On Monday, Mr Qasemi denied reports that it was holding secret talks with France over its ballistic missile development.

“There have been no talks, whether secret or not secret, about our missile program with France or any other country,” Mr Qasemi told state TV.

He also reiterated that an EU decision to reimpose sanctions on Iran would result in the country resuming its uranium enrichment program.

The UN Security Council resolution which enshrined Iran’s 2015 nuclear deal called upon Tehran to refrain for up to eight years from working on ballistic missiles.

Iran, which has since conducted missile tests, maintains they do not violate the resolution as the missiles are not enabled to carry nuclear warheads.

Despite concerns over Iran’s role in the region, the EU also reiterated its desire to preserve the nuclear deal, which the bloc sees as the best way to keep Iran’s nuclear work in check.