15:32 | 26/09/2018 Global Economy
In a major snub to the United States, the European Union has decided to set up a new mechanism to enable legal trade with Iran without encountering US sanctions.
The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc’s foreign policy chief said late on Monday, in a bid to evade US punitive measures.
US President Donald Trump withdrew from a 2015 nuclear deal in May and re-imposed sanctions on the country.
Mogherini’s announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York.
“In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world,” she told reporters after the closed-door meeting.
The EU, along with Russia and China, said in a joint statement that the so-called “Special Purpose Vehicle” will “assist and reassure economic operators pursuing legitimate business with Iran”.
The statement added that the six countries signatory to the 2015 nuclear agreement “reconfirmed their commitment to its full and effective implementation in good faith and in a constructive atmosphere”.
2015 nuclear deal
Known formally as the Joint Comprehensive Plan of Action (JCPOA), the Iran nuclear deal ended a nearly 12-year standoff between Iran and Western powers in 2015.
It was spearheaded by the Obama administration and saw the lifting of international sanctions.
The nuclear agreement is meant to prevent Tehran from developing nuclear weapons, but Trump announced in May he was unilaterally pulling out because he felt it wasn’t strong enough and didn’t cover other issues of concern to the US and its allies, such as Iran’s military influence in the Middle East and its ballistic missile program.
The US has also accused Iran of promoting international terrorism, a charge Tehran vehemently denies.
A second round of US sanctions is expected in November, aimed at putting a stranglehold on Iranian oil exports.