EU's Plan for Financial Exchange with Iran 'Through Central Banks'

The Wall Street Journal has reported, citing several European officials, that the European Union is seeking to create or activate existing accounts of the Central Bank of Iran in the central banks of EU member states in order to preserve the Joint Comprehensive Plan of Action (JCPOA). The Wall Street Journal, in a report published on Tuesday, July 16, noted that this move is the first tangible action by the EU to maintain the JCPOA, directly confronting European governments with the efforts of the Trump administration to economically isolate Iran. According to European officials cited by the Wall Street Journal, the creation or activation of accounts for the Central Bank of Iran in the central banks of EU member states is one of several measures the EU is considering to preserve the JCPOA. The newspaper reports that this plan was presented during a meeting in mid-July between the foreign ministers of Germany, France, and the UK (and the EU's foreign policy chief) with Iranian officials in Vienna. Other European countries, including Austria and Sweden, have also announced that they are considering creating accounts for the Central Bank of Iran in their central banks. European officials cited by the Wall Street Journal emphasized that negotiations with the central banks of EU member states are ongoing, but these banks have not yet announced their agreement. The newspaper cites officials from the European Central Bank stating that in the face of US sanctions, banks are reluctant to establish financial connections with Iran. European officials have also told the newspaper that a prerequisite for this plan is the implementation of the Financial Action Task Force (FATF) criteria by Iran. Meanwhile, the fate of the four bills submitted to the parliament by the government for Iran's accession to the FATF remains unclear, and with the opposition from Ayatollah Khamenei, the Supreme Leader of the Islamic Republic, the path for these bills has become even more complicated. Iran has stated that if the economic benefits outlined in the JCPOA, including oil sales, are not realized, it may exit the JCPOA. Conversely, the US aims to reduce Iran's oil exports to zero, and with the return of its extraterritorial sanctions, financial exchanges with Iran will face many challenges. The EU's plan for transferring money through the central banks of these countries is taking place because even before the US withdrawal from the JCPOA, major European banks were avoiding financial exchanges with Iran due to fears of Washington's sanctions. The EU is also trying to protect European companies from US sanctions by activating the 'Blocking Regulation,' which prohibits EU companies from complying with US sanctions and does not recognize any court ruling for the enforcement of US penalties. This regulation, which was established in the 1990s to counter US sanctions against Cuba, has never been officially implemented. Even if the Blocking Regulation is enforced, companies that interact with the US may refrain from cooperating with Iran for fear of losing the US market. Nevertheless, EU leaders have expressed hope that medium and small European companies will be able to cooperate with Iran.