Iran's Foreign Minister Mohammad Javad Zarif stated that seven European central banks have agreed to create a 'special financial mechanism for communication with Iran and eventually turn this mechanism into an institution.' In an interview with the IRNA news agency on Friday, October 6, he mentioned that this mechanism would be established soon, but forming an institution that can operate beyond Iran may take longer. He quoted Federica Mogherini, the EU's foreign policy chief, stating that this special mechanism is not only for Europe, but other countries and companies can also deposit money into this account and withdraw funds for export costs. According to Zarif, this entity will have no presence in dollar markets and will only operate with euros. The Iranian Foreign Minister did not mention the names of the seven European countries that agreed to launch this special financial mechanism. Two days prior to these statements, Mogherini expressed hope that the special mechanism for facilitating trade cooperation with Iran would be implemented by 'before November' (10 Aban). According to Reuters, the Special Purpose Vehicle (SPV) is intended to enable trade and financial transactions with Tehran amid the implementation of U.S. sanctions against Iran. The foreign ministers of the five remaining countries in the JCPOA and Iran emphasized their 'commitment to pursuing specific actions' regarding payment and the continuation of Iran's oil exports in a statement on October 2. The establishment of a 'special financial institution' for continuing trade with Iran after the re-imposition of U.S. economic sanctions had been previously discussed. According to reports from two German media outlets, this financial entity will act as an intermediary exchange and can facilitate trade between Iranian and European economic parties through the exchange and transfer of financial credits. For example, Iran could send its oil shipment to a company in Spain, but the money from the sale of this shipment would remain as credit with this intermediary financial entity, so if, for instance, an Iranian buyer purchases machinery from a German manufacturing company, this transaction could be settled with the credit resulting from the sale of Iranian oil to the Spanish company. These European actions come as U.S. President Donald Trump has warned that any individual or country violating U.S. sanctions against Iran will face a U.S. response.
Zarif: Seven European Central Banks Agree on Special Financial Mechanism for Iran
Iran's Foreign Minister announced that seven European central banks have agreed to create a special financial mechanism to facilitate trade with Iran amidst U.S. sanctions. This mechanism will allow countries and companies outside of Europe to engage in financial transactions with Iran, operating solely in euros. This development is significant as it reflects ongoing European efforts to maintain trade relations with Iran despite U.S. pressure.
👥 Key Players
📰 What Happened
Seven European central banks have agreed to establish a special financial mechanism to facilitate trade with Iran, bypassing U.S. sanctions. This mechanism will operate in euros and allow international transactions with Iran.
- The mechanism will not use U.S. dollars, operating solely in euros.
- It aims to support continued trade with Iran, including oil exports, despite U.S. sanctions.
💡 Why It Matters
📚 Background
The U.S. withdrew from the JCPOA in 2018, re-imposing sanctions on Iran. The EU has since sought ways to preserve the deal and support Iran's economy.
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