Russia wants in on INSTEX

Moscow will join European efforts to circumvent US sanctions on Iran, the Financial Times has reported.

    Russian President Vladimir Putin and Iranian President Hassan Rouhani have found themselves on the same geopolitical axis on several issues [Sergei Chirikov/Pool/Reuters]
    Russian President Vladimir Putin and Iranian President Hassan Rouhani have found themselves on the same geopolitical axis on several issues [Sergei Chirikov/Pool/Reuters]

    Russia wants European efforts to get around US sanctions on Iran to include Tehran's lucrative oil exports and has thrown its weight behind INSTEX, Britain's Financial Times has reported.

    INSTEX was set up as a trade vehicle in a bid to stop the Iranian economy from imploding as Washington's sanctions take hold. But its scope is severely limited, with just 10 of the European Union's 28 nations taking part and a credit line just a fraction of pre-sanctions trade.

    Crucially, INSTEX at this time only covers humanitarian goods, allowing the US chokehold on key Iranian exports - notably oil - to suffocate Iran's economy.

    If Moscow were to join the mechanism, it would be a major boost to European efforts to save the 2015 nuclear deal (known as the Joint Comprehensive Plan Of Action or JCPOA), which has been unravelling in recent weeks.

    "The full potential of INSTEX will only be able to be deployed if it will be open to the participation of countries which are not members of the European Union," a Russian foreign ministry spokesman told the Financial Times.

    190701095202660

    “If the encouraging statements by the EU... will be backed up by concrete steps and practical advances, including in relation to the use of INSTEX for servicing trading in Iranian oil, it will help stabilise the difficult situation created around the JCPOA." 

    Sanctions regime

    The JCPOA nuclear deal agreed between Iran and world powers was designed to offer sanctions relief to Iran, unfreezing billions of dollars in Iranian assets held around the globe, in exchange for Iran curbing its nuclear programme.

    But in 2018, President Donald Trump unilaterally withdrew the US from the deal and imposed a raft of severe sanctions that hit Iran's economy hard. Trump threatened secondary sanctions against companies operating in other countries, inviting corporate leaders to "make a choice" between doing business in Iran or the US.

    Over the past year, Iran has been looking to European signatories to the deal for support and has said that INSTEX, if it could not help resume Iran's oil trade, was next to useless.

    If the other signatories to the JCPOA would or could not uphold their side of the deal, Iran would also begin to reduce its commitment to the agreement.

    190707051824231

    In recent weeks, Iran has begun enriching uranium to a higher degree of purity than had been agreed under the deal, while building its stockpiles of fissile material - not least because under the sanctions regime, it can't export what it produces anyway.

    European powers are open to the idea of bringing Russia into INSTEX, officials told the FT. 

    "The issue of whether or not INSTEX will deal with oil is a discussion that is ongoing among the shareholders," outgoing EU foreign policy chief Federica Mogherini said earlier this week.

    Ongoing tensions have focused on oil tankers after British forces seized a ship off Gibraltar believed to be carrying Iranian oil to Syria. Western-flagged tankers in the Gulf had subsequently reported an increased Iranian naval presence threatening their passage, and one foreign tanker was seized and its crew arrested by Iran on Thursday morning. On Wednesday, the UK announced it was sending a third warship to the area, but that the move was not related to the Iran crisis.

    SOURCE: News agencies