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JULY 2020

Trump To Unleash Hell On Europe: EU Announces Channel To Circumvent SWIFT And Iran Sanctions Is Now Operational

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Originally appeared at ZeroHedge

With the world waiting for the first headlines from the Trump-Xi meeting, the most important and unexpected news of the day hit moments ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.

Following a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by US, French, British and German officials said the trade mechanism which was proposed last summer and called Instex, is now operational.

As a reminder, last September, in order to maintain a financial relationship with Iran that can not be vetoed by the US, Europe unveiled a “Special Purpose Vehicle” to bypass SWIFT. The mechanism would facilitate transactions between European and Iranian companies, while preventing the US from vetoing the transactions and pursuing punitive measures on those companies and states that defied Trump. The payment balancing system will allow companies in Europe to buy Iranian goods, and vice-versa, without actual money-transfers between European and Iranian banks.

The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called  “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.”

Trump To Unleash Hell On Europe: EU Announces Channel To Circumvent SWIFT And Iran Sanctions Is Now Operational

European and Iranian officials attend a meeting of the JCPOA Joint Commission in Vienna, Austria, June 28, 2019

Until today, Tehran was skeptical about EU’s commitment to the deal and threatened to exceed the maximum amount of enriched uranium allowed it by the deal after US had imposed a series of sanctions on the country.

Meanwhile, opponents of Instex – almost exclusively the US – have argued that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.

The announcement sent oil sharply lower, with crude futures falling about $1/bbl in closing minutes before settlement, extending daily loss, as it means Iran now has a fully functioning pathway to receive payment for oil it exports to anyone it chooses.

Trump To Unleash Hell On Europe: EU Announces Channel To Circumvent SWIFT And Iran Sanctions Is Now Operational

The announcement will likely send president Trump off the rails, because in late May Bloomberg reported that as part of Trump’s escalating battle with “European allies” over the fate of the Iran nuclear accord, he was “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions” including the loss of access to the US financial system.

According to Bloomberg, the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.

“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in an ominous letter to Instex President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Germany, France and the U.K. finalized the Instex system in January, allowing companies to trade with Iran without the use of U.S. dollars or American banks, allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

“This is a shot across the bow of a European political establishment committed to using Instex and its sanctions-connected Iranian counterpart to circumvent U.S. measures,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies in Washington.

Here is a simpler summary of what just happened: this was the first official shot across the bow of the USD status as a global reserve currency, and not by America’s adversaries but by its closest allies. And once those who benefit the most from the status quo openly revolt against it, the countdown to the end of the USD reserve status officially begins.

* * *

When asked to comment on the letter, the Treasury Department issued a statement saying “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.”

The US ire was sparked by the realization – and alarm – that cracks are appearing in the dollar’s reserve status, opponents of Instex argue – at least for public consumption purposes – that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.

Separately, during a visit to London on May 8, Mike Pompeo also warned that there was no need for Instex because the U.S. allows for humanitarian and medical products to get into Iran without sanction.

“When transactions move beyond that, it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction,” Pompeo said. “It’s very straightforward.”

In conclusion, one month ago we said that “In 2018, Europe made a huge stink about not being bound by Trump’s unilateral breach of the Iranian deal, and said it would continue regardless of US threats. But now that the threats have clearly escalated, and Washington has made it clear it won’t take no for an answer, it will be interesting to see if Europe’s resolve to take on Trump – especially in light of the trade war with China – has fizzled. ”

The answer, it appears is that Europe felt unexpectedly emboldened, just hours before Trump’s meeting with Xi, and that it is ready and willing to call Trump’s bluff; it goes without saying, that if the US does indeed retaliate and proceed with sanctions against European banks, than the global trade war is about to turn far, far uglier.

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  • jm74

    One does get a giggled concerning this sentence from the post “Following a meeting between the countries who singed the Iran nuclear deal..”
    Bit of an irony using the word “singed” which means slightly burnt; scorched. So very true.

  • RichardD

    Either PressTV has a different take on this, or they haven’t updated their coverage of the story. Because the way that I read the article. They’re saying that it’s to little to late:

    “Araqchi said the Europeans have confirmed that the planned INSTEX trade mechanism is now “operational” and the first transactions are already processed.

    However, the Iranian official added that this was still insufficient because European countries were not buying Iranian oil.”

    – ‘Not enough progress’ in Vienna talks on salvaging Iran nuclear deal –

    https://www.presstv.com/Detail/2019/06/28/599663/Iran-nuclear-deal-Instex-Vienna-diplomats-Abbas-Araqchi

  • Tommy Jensen

    Me and Bolton already told you. If you go against America we will unleash hell on you and you will feel the pain no matter who you are……………………………….LOL.
    Besides, the INSTEX will only be used for Irans pay for Western experts and NGOs like the White Helmets, MSF and Red Cross……………………LOL. You pay!

    • US-Navy Revert Shia

      You are a total ass-hole ass-hole. I know who type’s this [BS] Online must be a AngloZionist jewboy who wants dick, or some “Scumbag unread Redneck” from bum fuck nowhere. This is the Big Apple ass hole, And the Resistance Starts Here [US]- President-G. Washington made his name and war here in [NYC-USA] ASS-HOLE

    • Brian Michael Bo Pedersen

      Its USA, not America, America is both continents and includes many countries that would be very embarrased to be part of “your america”

      And the US cannot “Unleash hell” on anyone without the help from Europe and financial go from China, Israel and Saudi Arabia.

      And “unleash hell on you and you will feel the pain no matter who you are” is typical warmongering oral diarrhea from a person who dont know anything about the suffering war brings.
      All that i told you about in our last dicussion, but as usually, you dont understand anything and live in your own perfect world, without any sense of reality and understanding of the war you are promoting and want to happend.

      As i also said in our last discussion, wich you never replied to, you Tommy, is the one who needs help, you and people like you.

      PS
      Its “Bolton and I”, no polite and educated person ever says themselfes first, thats just common politeness.
      But with the little i know about you, i do not expect any polite and educated answer from you.

      • Tommy Jensen

        There is no go from anyone. They do what we say, or else…………… That’s the game my boy. You don’t like it? Your problem!
        Then you have a problem man. We don’t have any problems, but YOU have personal problems, we don’t!

        • Brian Michael Bo Pedersen

          You are a lost case Tommy, not worth my time or effort.
          I hope you one day wake up from your dream.

          Good Bye

      • Astrid Watanabe

        “But with the little I know about you…….”
        Tommy Jensen is a joker. He is pulling your leg. I am surprised how many people fall into his trap. I did too at first. He is probably having fun doing it. As somebody else said, nothing wrong with a little levity.

        • Brian Michael Bo Pedersen

          Ive blocked him, ive had enough of him and his BS, not worth my time or effort.

          Thanks for letting my know.

  • Rhodium 10

    This is for trade humanitarian products.. as Irani banks are not allowed to use Swift…but other thing is to trade with Iran( oil,goods..etc..) and pay them through Instex….and I dont think that EU companies sell or buy to Iran because they lose American market!…

  • cechas vodobenikov

    impotent amerika—abandoned by their supposed allies. bullies r cowards

  • daniel

    This is a big Lie, because European companies are not operating in Iran, they fear US and dont invest in Iran, European companies and European countries dont buy oil from Iran ….. so INSTEX is nothing but “Castration evidence of European servants”

    • You can call me Al

      That is absolutely untrue.

  • FlorianGeyer

    ” The announcement will likely send president Trump off the rails,”

    I read an article the other day,I cannot recall where, but the author mooted that one way Trump could back out of the march to war on Iran that could easily derail his re-election 2020, would be to ‘reluctantly’ accept a European initiative to adhere to the spirit of the JCPOA.

    Trump could then say that he does not agree with the Europeans, but that he would ‘See what happens ‘ !

    Then retire Pompous and Bolton who are undermining Trump anyway. This could even be reluctantly acceptable to the Israelis because they realise that they are in the front line of a war where their opponents have tens of thousands of accurate missiles in range of Tel Aviv and Dimona.

    This scenario is a possibility and I suppose we will all have to wait and see what happens :)

    • daniel

      This is lie, EU can’t do such a thing , think twice!

      • FlorianGeyer

        It is not a lie, as it was only mooted as a possible scenario and therefore is NOT saying that it was a fact.

        Time will show what does happen.

        I guess you are a dumbass Yank who has little command little of the language you speak. Rather like ‘Ever so smart blow dry Trump. So perhaps it is you who should Think Twice. In fact think a few dozen times, as all your posts I have read here are bluster, and you need the practice.

        Oh, by the way, the EU INSTEX swap system with Iran is now in use.

        • Astrid Watanabe

          “…..Think twice….In fact think a few dozen times……”
          Good advice. Even i need to be reminded now and then.

  • Brother Ma

    Great news if it is actually used as hopefully non-euro players can come on board as well and buy Iranian oil .However ,I can’t see that happening yet as they are too scared of Murica.

  • St. Augustine

    Sigal Mandelker the Israeli. Must be another coincidence.

  • DaBoiiiii

    You guys are jumping on to this way too quickly. Might be legit, but I don’t trust these European elites at all.

    Time will tell if this Instex thing will actually do anything.