INSTEX a test of credibility for Europe: Indian analyst

Tehran, Feb 5, IRNA – Iran strategic location, linking the Persian Gulf and the Indian Ocean to Central Asia, as well as its crude are important to India. So any alternative financial mechanism for trade with Iran will prove useful to the country, an Indian expert says. 'European elite … has to decide if they want to play an independent role in a changing world order or buckle under US pressure and keep the arrangement limited to ‘humanitarian’ engagement,' according to an oped written by Gulshan Sachdeva for India's financial website Money Control. Sachdeva, who has been introduced by the outlet as a European Studies expert at Jawaharlal Nehru University, believes that Iran nuclear deal 'provided the EU with a good opportunity to project itself as a significant global player. He goes on to call the new European special purpose vehicle, called INSTEX, 'limited and symbolic'. 'However,- the author says- if the mechanism is extended to energy deals and third countries, it will make Europe a credible actor in global affairs.' Answering the question 'Can INSTEX unite India, China and EU to bypass US sanctions on Iran?' the Indian professor adds that 'as Iran is crucial for India to expand its options in the entire Eurasian region, establishment of any additional alternative mechanism of financial interaction with Tehran is going to be useful.' 'To further strengthen its commitment to the Iran nuclear deal or the Joint Comprehensive Plan of Action (JCPOA), the European Union (EU) has taken a concrete step,' Sachdeva writes. Before unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and simultaneous with US President Donald Trump's threats to disrupt the deal, European countries announced that they would find a solution to keep and facilitate the union's trades with Iran. On January 31, three European countries — France, Germany and UK (also known as the E3) launched a special payment vehicle called Instrument in Support of Trade Exchanges (INSTEX). This EU-supported mechanism will facilitate European trade with Iran. The E3 foreign ministers declared in a joint statement that initially, the INSTEX will support “pharmaceutical, medical devices and agri-food goods”. In a statement, EU High Representative for Foreign Affairs and Security Policy Federica Mogherini asserted that the mechanism “will provide economic operators with the necessary framework to pursue legitimate trade with Iran”. The author reiterates that although European companies were allowed to trade with Iran on non-sanctioned goods, most banks, having exposure in the US, avoided Iranian payments. He concludes that new non-dollar channel will help EU and possibly companies from other countries to facilitate their Iranian trade.