Iraqi: The Dominance of the Dollar Over European Institutions is the Reason for the Delay in the Special Mechanism

Abbas Araghchi, Iran's Deputy Foreign Minister, on Friday discussed the reasons for the delay in launching the European financial special mechanism and its operationalization, pointing to the dominance of the dollar and the American financial system over European institutions and the complexities of this mechanism. Speaking with Young Journalists Club, Araghchi stated: "Unfortunately, due to the dominance that the dollar and the American financial system have over European institutions, creating a mechanism that does not deal with this dollar dominance and cannot be ensnared by American sanctions is not an easy task." He also emphasized that the European parties are working on the implementation of this special financial mechanism known as SPV. According to Araghchi, "The political will of European countries to help Iran in countering American sanctions is clear and evident." He described the European actions, as the closest allies of Washington, to assist a country like Iran in standing against U.S. sanctions as "unprecedented." The European Union's mechanism, called the Special Purpose Vehicle (SPV), is designed to preempt U.S. sanctions against banks that facilitate the transfer of funds for Iran's oil exports. The SPV can be linked to a barter system and utilizes an intermediary institution in the EU to conduct trade with Iran. This mechanism ensures that, for example, the money from Iran's oil exports to European countries is compensated by the sale of European goods and services to Iran. The implementation of the so-called special mechanism to maintain economic relations with Iran was announced in early October 2018, following a meeting related to the JCPOA in New York by Federica Mogherini, the EU's foreign policy chief, and Mohammad Javad Zarif, Iran's Foreign Minister, and speculation about this special mechanism has been ongoing since then. Washington reacted at that time to such a decision by its former partners in the nuclear deal with Iran, calling it a "wrong message at the wrong time" to Iran. The United States is determined to implement a comprehensive maximum economic pressure campaign on Tehran. Previously, Western diplomats had stated that this special European mechanism would "symbolically" begin operations on November 4, but they predicted that its operationalization would take until early this winter. The Iranian Deputy Foreign Minister also referred to the signing of a statement by three European foreign ministers and Federica Mogherini, along with the agreement of the finance ministers of the UK, France, and Germany, emphasizing their continued technical work to operationalize the SPV, describing this event as "rare." Araghchi stated the necessary conditions for the implementation of the European financial special mechanism, saying: "It is necessary to establish a similar mechanism to the SPV in Iran to be able to interact with the Europeans." According to the Iranian Deputy Foreign Minister, "The European special financial mechanism has technical, financial, and legal details that take time to achieve." Previously, informed sources in the EU had told Radio Free Europe/Radio Liberty about the obstacles and problems in operationalizing this mechanism. One of the issues raised was the hosting problem of this mechanism in the EU. According to these informed sources, none of the 28 EU member countries were willing to host this special mechanism. An EU source emphasized to Radio Free Europe/Radio Liberty that although European countries have made closed efforts to advance the establishment of a special mechanism to facilitate payments related to Iran, "neither a host for establishing this office has been found nor has its legal and managerial structure been defined yet." Additionally, about two weeks ago, Heshmatollah Falahatpisheh, the head of Iran's National Security and Foreign Policy Commission, stated that the implementation of the European proposal package to Iran depends on factors such as "possible de-escalation" between Iran and the U.S. On Friday, Abbas Araghchi expressed hope that "this mechanism will be announced and officially registered in Europe very soon" so that it can gradually become operational afterward. He also acknowledged that the Europeans have moved "much slower" than Iran had anticipated. The EU, along with China and Russia, hopes that despite the U.S. withdrawal from the nuclear deal known as the JCPOA, Iran will remain in this agreement. However, Iranian officials have warned that if Iran cannot practically benefit from the JCPOA, there is no reason to remain committed to this agreement. Iran and six world powers reached an agreement known as the JCPOA in July 2015 to resolve Tehran's nuclear program and lift sanctions, but the United States withdrew from this agreement on May 8, accusing Iran of developing its missile program and destabilizing the region.