EU is still working on establishing a so-called special purpose vehicle or payment mechanism to enable trade with Iran and counter US sanctions against Iranian oil exports that entered into force today (5 November). At today’s press briefing in Brussels the European Commission’s chief spokesperson declined to clarify the status of the payment mechanism and referred to EU foreign policy chief Federica Mogherini’s statement last Friday evening. She announced the plans for a payment mechanism on 24 September.
In a joint statement with the foreign and finance ministers of France, the UK and Germany she said the efforts to preserve the continuation of Iran’s export of oil and gas have been intensified in recent weeks, “particularly those underpinning the European initiative to establish a Special Purpose Vehicle on which we are proceeding with work to set up”.
But apparently the work is still on-going and European companies do not know yet if they should cancel contracts with Iran, as some already have done, or risk US sanctions and wait for the payment mechanism. “Our Finance Ministers will further pursue this at their next meeting. Our collective resolve to complete this work is unwavering.”
According to previous statements by a Commission spokesperson the work on the mechanism is in the hands of the member states. The Swedish Ministry of Foreign Affairs, which supports the nuclear deal with Iran, told The Brussels Times today that discussions on expert level are still continuing.
A source in the European Central Bank had nothing to add on the possible features and expected effectiveness of the mechanism but said that it is ready to share expertise and exchange views with EU institutions and governments on payment-system related issues.
Irrespective of the EU plans for a paying mechanism to circumvent US sanctions, China and India, the largest buyers of Iranian oil, will continue buying the oil and Turkey and Russia are also expected to do it.