Iran’s ‘special-purpose vehicle’ turns out to have no engine

Europe has shown good faith toward Tehran since the US pulled out of the 2015 nuclear deal last May, and promised to launch a financial mechanism to enable Iran to counter President Donald Trump’s sanctions. 

This plan was for a “special-purpose vehicle,” or SPV, to protect European companies that did business with Iran from becoming entangled in US sanctions. The aim was to persuade Iran to remain committed to the nuclear deal, and at the same time to show Trump that the EU’s interests were not necessarily exactly aligned with those of the US. 

Finally, after months of debate, and even threats from Iran to withdraw from the deal if this “vehicle” did not run soon, last week the UK, Germany and France turned on the ignition.

Disappointingly, the vehicle’s engine appears to be insufficiently powerful to take the ayatollahs where they want to go. Indeed, it is no longer even called a vehicle. The new name is INSTEX, or “Instrument in Support of Trade Exchanges.” And rather than help Iran with financial transactions, it will concentrate instead on trade in humanitarian aid such as food and medicine. 

Iran’s hard-liners are already calling INSTEX an insult to Iranian dignity and public morals, and have demanded that it be rejected. Nevertheless, Iran’s foreign ministry spokesman Bahram Qasemi welcomed the initiative and called for its full implementation.

In fact, the new mechanism is nothing more than a mouthful of promises. It is limited to medicine and food, with no mention of the EU’s willingness to import oil from Iran — which they promised, and which is an important issue for Tehran.

All trade with Iran will have to be legal and transparent, in other words not subject to sanctions. Even trade in humanitarian goods is subject to Iran’s implementation of its action plan to comply with the requirements of the international Financial Action Task Force on money laundering and terrorist financing. 

Of course, for millions of ordinary Iranians suffering from economic hardship and struggling every day to support their families, the difference between INSTEX and an SPV is irrelevant. Indeed, during a harsh, cold winter, when they have to stand in line for hours to buy imported frozen beef limited to 2kg per family, it is an insult. 

The nuclear deal promised Iranians normal relations with the rest of the world, not more trouble having to seek emergency humanitarian assistance. 

No one blames the EU for not being able to help Iranians in their time of need. Indeed, many are asking why the ayatollahs’ best friends, Russia and China, have done nothing to confront Trump’s sanctions.

At least Europe has shown good faith, although relations with Tehran recently worsened. The EU imposed sanctions over Iran’s missile tests and its assassination plots on European soil, and remains keen to address these issues round a negotiating table. 

In the end, Europe’s relationship with Iran is unlikely to be any better than America’s — but its security and financial interests require a small open door to Tehran.

• Camelia Entekhabifard is an Iranian-American journalist, political commentator and author of Camelia: Save Yourself By Telling the Truth (Seven Stories Press, 2008). Twitter: @CameliaFard