EU, UK, Russia and China Join Together to Dodge US Sanctions on Iran

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Written by Peter Korzun; Originally appeared on strategic-culture.org

The UN General Assembly (UNGA) in New York is a place where world leaders are able to hold important meetings behind closed doors. Russia, China, the UK, Germany, France, and the EU seized that opportunity on Sept. 24 to achieve a real milestone.

The EU, Russia, China, and Iran will create a special purpose vehicle (SPV), a “financially independent sovereign channel,” to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of Action (JCPOA), which is in jeopardy. “Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran’s exports, including oil,” they announced in a joint statement. The countries are still working out the technical details. If their plan succeeds, this will deliver a blow to the dollar and a boost to the euro.

EU, UK, Russia and China Join Together to Dodge US Sanctions on Iran

The move is being made in order to save the 2015 Iran nuclear deal. According to Federica Mogherini, High Representative of the European Union for Foreign Affairs and Security Policy, the SPV will facilitate payments for Iran’s exports, such as oil, and imports so that companies can do business with Tehran as usual. The vehicle will be available not just to EU firms but to others as well. A round of US sanctions aimed at ending Iranian oil exports is to take effect on November 5. Iran is the world’s seventh-largest oil producer. Its oil sector accounts for 70% of the country’s exports. Tehran has warned the EU that it should find new ways of trading with Iran prior to that date, in order to preserve the JCPOA.

The SPV proposes to set up a multinational, European, state-backed financial intermediary to work with companies interested in trading with Iran. Payments will be made in currencies other than the dollar and remain outside the reach of those global money-transfer systems under US control. In August, the EU passed a blocking statute to guarantee the immunity of European companies from American punitive measures. It empowers EU firms to seek compensation from the United States Treasury for its attempts to impose extra-territorial sanctions. No doubt the move will further damage the already strained US-EU relationship. It might be helpful to create a special EU company for oil exports from Iran.

Just hours after the joint statement on the SPV, US President Trump defended his unilateral action against Iran in his UNGA address. US Secretary of State Mike Pompeo condemned the EU initiative, stating, “This is one of the most counterproductive measures imaginable for regional global peace and security.”

To wit, the EU, Russia, and China have banded together in open defiance against unilateral steps taken by the US. Moscow and Beijing are in talks on how to combine their efforts to fend off the negative impacts of US trade tariffs and sanctions. A planned Sept 24-25 visit by Chinese Vice-Premier Liu, who was coming to the United States for trade talks, was cancelled as a result of the discord and President Trump added more fuel to the fire on Sept. 24 by imposing 10% tariffs on almost half of all goods the US imports from China. “We have far more bullets,” the president said before the Chinese official’s planned visit. “We’re going to go US$200 billion and 25 per cent Chinese made goods. And we will come back with more.” The US has recently imposed sanctions on China to punish it for the purchase of Russian S-400 air-defense systems and combat planes. Beijing refused to back down. It is also adamant in its desire to continue buying Iran’s oil.

It is true, the plan to skirt the sanctions might fall short of expectations. It could fail as US pressure mounts. A number of economic giants, including Total, Peugeot, Allianz, Renault, Siemens, Daimler, Volvo, and Vitol Group have already left Iran as its economy plummets, with the rial losing two-thirds of its value since the first American sanctions took effect in May. The Iranian currency dropped to a record low against the US dollar this September.

What really matters is the fact that the leading nations of the EU have joined the global heavyweights — Russia and China — in open defiance of the United States. This is a milestone event. It’s hard to underestimate its importance. Certainly, it’s too early to say that the UK and other EU member states are doing a sharp pivot toward the countries that oppose the US globally, but this is a start — a first step down that path. This would all have seemed unimaginable just a couple of years ago — the West and the East in the same boat, trying to stand up to the American bully!

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  • Jesus

    The unipolar world of the US is becoming unhinged, as US wants to play the role of bully, telling the world what to do, the world is joining together and finding ways to neutralize the bully.

  • seawolf

    Imperialist countries clashes and temporary alliances trying to save capitalism. But the system is rotten and smells bad and it needs a total replacement

  • Luke Hemmming

    Ah so the US/Israel dominance of the world is coming apart. The wheels of the wagon are starting to fall off it would seem. Better start buying gold then as cash will be useless when the world economy crashes.

    • TiredOfBsToo

      The world economy will take a hit as those US treasuries they’re holding are worthless, but it’s the US economy that will crash. That implies that all of those military bases around the world will finally have to close and go home (shouldn’t have been there in the first place) as they’ll be too expensive to keep operating. No more aircraft carrier strike groups to impose dictators on democracies that don’t agree to become servants to the West. I would call that a HUGE peace dividend.

  • Brother Ma

    At last ! A blow to the SWIFT system ,the dollar and US hegemony over countries. A win for the little people!

  • Manuel Flores Escobar

    EU dont want to lose the Iranian market…among other reason China has already emerged as a reliable supplier…

    • Hisham Saber

      Also, China’s State Oil Company has already bought a 80% share in the South Pars Iranian gas field, the largest in the world. They will float Iran through the sanctions, undermining them at every turn. China will keep Iran flush with commodities, dollars and raw materials.

  • Peter Moy

    To put it simply the US is being bypassed by the EU, Russia and China when trading with Iran. Increased tariffs and sanctions on imports to the US will only backfire. This will mean higher prices for all consumers. (On a side note: US consumer debt (home and business mortgages, credit card debt, auto loans, student loans and personal loans) is already more than $13.2 TRILLION dollars (USD). That number means that much of the so-called US high standard of living and prosperity is just a superficial facade and illusion.

  • Sephy

    Then a war is coming, maybe.

  • alejoeisabel

    If you are a supporter of the anti Imperialist camp, there is no better ally to hasten its demise than Israel. Because of Israel’s demand to have the United States to abandon the Iran Treaty and impose its will on its European “allies” not to trade with Iran, the EU is converging with Russia and China. The US chooses Israel over the EU. Nice.

  • matt

    HOPE

  • Sinbad2

    The British will be in it to tell the US what is happening, and to play spoiler.

    https://youtu.be/37iHSwA1SwE

  • danny holmes

    If this initiative is successful it means Trump unconditional love Isreal is what bring Trump down because if the dollar collapses under Trump watch then his MAGA agenda will be torpedo along the way.

    Also how can Isreal was think it is in her interest to start something that leads to US dollar being dethroned as the world reserve currency and sending US economy into tail spin ?!