Iranian Company to be Registered in Tehran in Line with INSTEX Soon

The head of Iran's Central Bank announced that a mechanism compatible with the European financial system, named the Special Trade and Finance Mechanism (STFI), will soon be registered in Tehran. According to the IRNA news agency, Abdolnaser Hemmati emphasized that Central Bank officials provided comprehensive explanations about this mechanism during a meeting with the director of INSTEX and representatives from three European countries. Mr. Hemmati did not mention details about this mechanism. Alireza Rahimi, a member of the Parliamentary Board, stated on March 11 that 'in the INSTEX agreement, a mechanism is foreseen where a company is registered in Europe, and its corresponding company, as the Iranian counterpart, must be registered in Iran.' According to Mr. Rahimi, this company will be registered under the Ministry of Economy or the Central Bank. Per Fischer, the director of the Special Financial Mechanism for trade with Iran or 'INSTEX,' visited Tehran last week, and on Tuesday, negotiations were held between the Iranian expert delegation and representatives from France, Germany, and the UK, as well as the European Union. The three European countries announced on January 31 the official registration of the special financial mechanism for trade with Iran but conditioned its operationalization on 'further work.' 'INSTEX' (INSTEX) is an acronym for 'Instrument in Support of Trade Exchanges,' a new entity established by Germany, France, and the UK to reduce the impact of US sanctions against Iran. Members from France and Germany are present in its supervisory board, and it is headed by Per Fischer, the former manager of Commerzbank Germany. Iranian officials have criticized the delay in implementing the European financial mechanism; however, there are also opponents of this mechanism among Iranian officials. For instance, Sadegh Larijani, head of the Expediency Council, stated on February 4 that Europe has set 'two humiliating conditions' for implementing the financial mechanism with Iran. According to Mr. Larijani, the acceptance of the Financial Action Task Force (FATF) regulations and negotiations regarding Iran's missile program are two of Europe's conditions. In the statement from the foreign ministers of the three European countries, there was no mention of Iran's missile activities, but they stated that 'it is expected' that Iran 'will firmly implement all elements related to the FATF.' However, the bills for Iran's accession to the Convention on Combating the Financing of Terrorism and the Palermo Convention on Transnational Organized Crime remain unresolved in the Expediency Council. The head of the Central Bank also stated that the registration of the STFI company in Tehran 'in no way means that Iran is waiting for the European mechanism to become operational.' According to Mr. Hemmati, the Islamic Republic will continue its designed methods for financial transactions under sanctions, especially through neighbors and other trade partners. The head of the Central Bank of Iran previously mentioned in October, without going into details, initial 'agreements' with Russia and Turkey to eliminate the dollar and conduct economic transactions using the national currencies of the three countries. Meanwhile, the Supreme Leader of the Islamic Republic stated on September 7, during a meeting with Vladimir Putin, that the sanctions against Iran, Russia, and Turkey by the US represent 'a very strong common point' for expanding cooperation among the three countries and emphasized conducting transactions and economic dealings outside the dollar framework. The idea of trading with national currencies has emerged while, during the previous round of sanctions against Iran before the JCPOA, the money from Iran's oil sales was blocked in some countries like China, India, Japan, and South Korea. At the same time, some countries like India and China committed to paying for oil purchases from Iran in rupees and yuan, but Tehran was forced to spend this income on purchasing goods from these countries, which, according to economic experts, were of low quality. Yahya Al-Ishaq, head of the Tehran Chamber of Commerce, stated in 2014 that Iran has 'about $100 billion of frozen currency' in countries like China, India, and Japan, but 'cannot quickly utilize them.'