Iraqi's Hope for the Implementation of Europe's Special Financial Mechanism in the Coming Weeks

On Wednesday, March 6, Iran's Deputy Foreign Minister Abbas Araghchi expressed hope that the special financial mechanism with Europe known as 'INSTEX', aimed at protecting trade with Iran from the consequences of U.S. sanctions, would be implemented in the coming weeks. Araghchi also stated that this special financial mechanism is only one of the commitments of the Europeans. France, Britain, and Germany created a new mechanism called 'INSTEX' in response to the U.S. withdrawal from the JCPOA and the resumption of nuclear sanctions against Iran to conduct transactions with Tehran without using the dollar. The return of sanctions against Iran has jeopardized the nuclear agreement between international powers and Tehran, although according to the International Atomic Energy Agency, Iran has so far adhered to its commitments under this agreement. On Wednesday, after a meeting in Vienna with representatives of the JCPOA signatory countries minus the U.S., which is held every three months, Araghchi told reporters, 'We hope that INSTEX will be implemented in the coming weeks.' For this special mechanism to be operational, Iran needs to create a counterpart institution and mechanism to INSTEX. Araghchi expressed hope that this plan would be operational before Nowruz. Washington has accused European countries of attempting to weaken international pressure on the Iranian government by undermining sanctions. The initial goal of creating INSTEX was to facilitate the purchase of Iranian oil and gas in exchange for European goods without the involvement of the dollar. However, it seems that the goals of this mechanism have gradually become more limited. According to diplomats, in practice, this special mechanism will only be used for small commercial transactions such as purchasing food or humanitarian goods. However, Abbas Araghchi rejected this assessment, stating that over time the scope of this mechanism's use could expand. After meeting with representatives from Russia, China, Germany, France, Britain, and the European Union, the Deputy Foreign Minister of Iran said, 'This mechanism is for all goods and products, not just humanitarian goods.' He added, 'But it will probably start with humanitarian items to gradually establish trading patterns with Iran, and once these patterns are established, other goods, including sanctioned goods and oil, will also be added to this mechanism.' According to him, Tehran has reminded the JCPOA members and the European side that the financial channel is one of their commitments, and economic cooperation with Iran has various dimensions, as the Europeans have 'agreed to continue economic cooperation in investment areas, facilitating their companies' presence to work with Iran, transportation, energy, etc., in the absence of the U.S. in the JCPOA.' The Iranian government has threatened that if it does not receive sufficient economic concessions, it may exit the JCPOA. Araghchi stated that INSTEX is 'a step in the right direction,' but it is still unclear how much it will achieve. He added, 'We need to see if this mechanism can achieve its goals when it is implemented.' He mentioned that in the future, the possibility of modeling this method in other areas could be examined.