It’s no secret that Europe has recently been making every effort to create a so called “Special Purpose Vehicle” which is suggested to help in maintaining ongoing business deals with Iran; but the European countries are yet to take any actions, indicating their inner fear of US sanctions.
In reference to 6 diplomats, Reuters reported that Europe’s unpreparedness in hosting its proposed vehicle, will likely shake things up in its original plan (which is to continue trading with Iran even after US sanctions).
Austria was previously asked to accept hosting this vehicle which will supposedly handle all payments to the Iranian Regime, but Austria declined.
According to Reuters’ predictions, the powerful European countries (which include Britain, France, and Germany) will likely begin pressuring Luxembourg now, for accepting to be the host.
However, Bloomberg reports that Luxembourg was already asked to host along with Belgium, and that they’ve both rejected this offer already (apparently before Austria was even asked).
What Europe shouldn’t take lightly here, is the sensitivity that revolves around its planned non-dollar trades with this vehicle. Because the Islamic Republic of Iran has already gave caution that if they don’t obtain the same economic and business advantages that they had back in 2015 (with the previous nuclear deal) they will be quitting their deals with Europe as well.
Europe’s intention behind creating this vehicle is for it to continue buying oil from the Iranian Regime on a non-dollar basis. In return, Iran is also hoping to continue importing food and various other products from Europe.
It has been reported that Europe’s planning the legal establishment of this vehicle within the next month or so, but that its practical use will commence next year.
Diplomats have advised Reuters that a currency is yet to be determined for this vehicle.
Even though this vehicle will be dependent on the local banks of its host country, they will not remain fully safe from potential sanctions and punishments of the US; it is very possible that US decides to cease all financial connections with the host country if this plan does really take effect.
According to Reuters’ reports of the same diplomats, Federica Mogherini (i.e., the High Representative of the European Union’s Foreign Affairs) who represented Europe in Iran’s previous nuclear deal a few years ago, has already asked several European countries to accept hosting this vehicle, and has attempted to persuade them to cooperate in order to protect their deals with Iran, but no one has accepted her offer just yet.
Iran’s Trade Promotion Organisation has also recently released reports which indicate a 17% drop in Europe’s exports to Iran (standing at 5.333 billion dollars) and a 7% decline in Iran’s non-oil exports to Europe (standing at 714 million dollars).
Regardless, diplomats believe that even if this vehicle does get launched successfully, it will not be capable of saving Iran’s deals with Europe, and that it will have more of a symbolic significance than practical.