European Union and Iran agree on new payment system to skirt U.S. sanctions

Iran nuclear deal: Plan put forward to dodge US sanctions

A second round, forthcoming on November 4, will be targeting Iran's oil sales and its Central Bank.

Iranian Minister of Foreign Affairs Mohammad Javad Zarif (center) and political deputy at the Ministry of Foreign Affairs of Iran Abbas Araghchi take part in a Comprehensive Plan of Action (JCPOA) ministerial meeting on the Iran nuclear deal on July 6, 2018, in Vienna, Austria.

Iran has ample reason to stay in the 2015 nuclear deal despite the US withdrawal and the remaining parties on Monday will discuss ways to blunt the effect of impending USA sanctions on Tehran, the European Union's foreign policy chief said.

Envoys from Britain, France, Germany, Russia, China and Iran issued a statement late Monday from the United Nations announcing the creation of a "Special Purpose Vehicle" that will be established in the European Union.

Iranian "ghost tankers" are dismantling their vessel tracking systems upon leaving the Strait of Hormuz in a bid to sell oil secretly around the world as Tehran braces for the Trump administration to reimpose harsh sanctions on its energy sector.

Several European diplomats told Reuters that the SPV idea was to create a barter system, similar to one used by the Soviet Union during the Cold War, to exchange Iranian oil for European goods without money changing hands.

"In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world", she said.

Some analysts, however, fear that the USA could amend its sanctions laws to ban such barter transactions.

The Iranian prime minister was expected to stress that Tehran continues to stick to the 2015 nuclear deal that Trump pulled out of and portray the U.S. as a pariah for breaking its global commitments.

Why do these nations want a deal with Iran?

Highlighting just how hard it will be for the Europeans to come up with concrete solutions, French state-owned bank Bpifrance on Monday abandoned its plan to set up a financial mechanism to aid French companies trading with Iran.

In May, President Donald Trump announced that the USA would be pulling out of the Joint Comprehensive Plan of Action (also known as the Iran nuclear deal), which had been negotiated by the Obama administration.

Over the past few months, Iran's economy has faltered, and its currency, the rial, hit a new low this week against the us dollar on the unofficial exchange rate.

The latest industrial action by oil truckers in Iran comes less than two months after the first set of USA sanctions on Iran snapped back, and just six weeks before the second round of sanctions, including on Iran's key revenue source-oil exports-kick in. The rial has lost about two-thirds of its value this year, hitting a record low against the US dollar this month.

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