How to evade Trump’s Iran sanctions
The European Union’s “lioness” has just roared in Donald Trump’s face, said in Handelsblatt (Germany). At last month’s United Nations summit, top EU diplomat Federica Mogherini announced the creation of a new payment channel to bypass U.S. sanctions against Tehran. Starting in November, Washington will be able to ban from the U.S. financial system any bank, shipping firm, or company that facilitates an oil transaction with Iran. Those sanctions are intended to force Tehran to sign a new deal that will end its entire nuclear program and rein in its foreign adventures in the Middle East; Trump pulled out of the previous Obama-era Iran nuclear agreement in May, calling it the “worst deal ever.” Yet the other parties to the 2015 deal—the U.K., France, Germany, the EU, Russia, and China— refuse to let the pact die, both because it is working as intended in curbing Iran’s nuclear ambitions and because they have started buying Iranian oil. Mogherini has persuaded the other parties to create a workaround known as a Special Purpose Vehicle (SPV), which would skirt the dollar-dominated international banking system. Now she must get European firms to start using the SPV. Otherwise, the Iranian economy will collapse, Iran will restart its nuclear activities, and “the lioness will end up as a bedside rug.”
This convoluted scheme came about partly because of “the regrettable importance of oil to the European economy,” said JeanPaul Baquiast in France’s MediaPart .fr. The SPV would work like this: Iran could send oil to a French firm, accumulating credit in the SPV that could then be used to pay an Italian company shipping goods to Tehran. No money would ever pass through Iranian hands, and so U.S. sanctions shouldn’t be triggered. But the U.S. could easily amend its sanctions to cover such bartering, and it’s doubtful that many major European companies will use the SPV, because they won’t want to incur the wrath of U.S. authorities. European multinationals with operations in the U.S., such as Airbus, Total, and Volkswagen, have already pulled out of Iran.
This SPV may not save the Iranian economy or the Iran deal, said Eleanor Beevor in Jordan’s AlBawaba.com. Still, it sets a defiant precedent. In the face of Trump’s bullying demands that the whole world follow his preferred trade policies, “there is a growing scramble to create systems that can evade the dollar’s power.” Trump clearly doesn’t care that his relentless demonization of Iran has angered U.S. allies and foes alike. But “for the sake of winning this battle, he may risk losing a bigger war—that of the dollar’s hegemony.” So many countries joining together against the dollar is a sign of the “shifting diplomatic winds,” said Borzou Daragahi in Independent.co.uk. “What is certain now,” says one Western diplomat, “is that, thanks to Trump’s policy, Europe is working more closely with China and Russia.”