Three European powers are set to make good on a plan to help companies trade with Iran, defying President Donald Trump with a bid to bypass US sanctions.
The entity, which could be presented as early as Monday, is key to the European Unions effort to save a 2015 nuclear accord with Iran after Trump withdrew the US. Whatever the economic impact, the push by the UK, France and Germany is another sign of European exasperation with the president.
A draft of an EU statement seen by Bloomberg welcomes 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. EU government envoys will discuss the statement in Brussels on Monday and may release it soon, if all 28 member countries agree, two diplomats said.
The initiative is designed to shield European companies keen to do business with Iran from U.S. sanctions that could result from dollar-based transactions.
The Trump administration has deemed the channel an attempt to evade its maximum pressure campaign against Iran, while questioning whether it’ll work. Sigal Mandelker, the Treasury’s top sanctions official, said in December she isn’t concerned at all that the mechanism can sidestep sanctions.
As envisaged by the EU, the special purpose vehicle would accept payments from companies that want to trade with Iran, either by receiving waivers for oil imports or permissible trade in goods like food and medicine. With no direct transfer of funds between Iran and European actors, it would theoretically insulate firms from US penalties.
Since the US left the nuclear accord and reimposed sanctions on Iran, the deals remaining powers -- China, France, Germany, Russia and the U.K. -- have struggled to ensure the sanctions relief promised when Iran agreed to limit its nuclear activities.
Iran’s nuclear chief, Ali Akbar Salehi, said last week his country to resume nuclear enrichment with more advanced technology if the agreement fails. Iran is considering producing nuclear fuel used in naval propulsion, implying it may ramp up uranium enrichment levels closer to the purity needed for weapons.