What happened: The UK, Germany and France, known as the E3, sent their first shipment of humanitarian aid to Iran yesterday using the INSTEX trade mechanism created in 2019 to bypass US sanctions.
- A statement by the UK Foreign Office said: “France, Germany and the United Kingdom (the E3) confirm that INSTEX has successfully concluded its first transaction, facilitating the export of medical goods from Europe to Iran. These goods are now in Iran.”
- It added: “INSTEX aims to provide a sustainable, long-term solution for legitimate trade between Europe and Iran as part of the continued efforts to preserve the JCPOA. Now the first transaction is complete, INSTEX and its Iranian counterpart STFI will work on more transactions and enhancing the mechanism.”
- According to the Wall Street Journal, the transaction was worth $548,000.
- Germany also said that the mechanism would allow other transactions to proceed in the future. In late 2019, six other European countries – Finland, Belgium, Denmark, Netherlands, Norway and Sweden – joined INSTEX and said that they “attach the utmost importance to the preservation and full implementation of the JCPOA [Iran nuclear deal] by all parties involved”.
- Despite being drawn up as a means to offset the economic burden on Iran resulting from US sanctions, the Trump administration did not object to the first shipment. A US State Department spokesperson said: “The US has no issues with humanitarian trade so long as it is conducted with strong due diligence measures to prevent the Iranian regime from hijacking the aid for itself.”
- Due to a decision last month by the US to reverse its sanctions guidelines to allow for medical and agricultural trade via Iran’s Central Bank, yesterday’s shipment did not violate US sanctions.
Context: The Trump administration has come under increasing pressure to relieve sanctions on Iran as it struggles to cope with the coronavirus pandemic.
- A group of 34 Democratic lawmakers, including presidential candidate Sen. Bernie Sanders and 12 anti-war groups, sent a letter to Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin on 31 March urging them to ease sanctions.
- In a tweet on Sunday, Iranian Foreign Minister Javad Zarif said that the “US has gone from sabotage & assassinations to waging an economic war & #EconomicTerrorism on Iranians to #MedicalTerror amidst #covid19iran.” Last week, Iran’s Supreme Leader Ayatollah Ali Khamenei said his country would not accept American assistance, calling US officials “charlatans and liars.”
- In February, the US and Switzerland formally launched a humanitarian trade channel for Iran, a move meant to counter criticism of Washington’s economic pressure campaign.
- Since last summer, Iran has started to violate the restrictions in the nuclear deal in response to US sanctions. The tactic underlined the diverging EU and US strategies for dealing with Iran.
- Iran is suffering from the worst coronavirus outbreak in the Middle East. The death toll climbed to 2,898 on 31 March, with more than 44,000 confirmed cases, Iran’s Health Ministry said.
Looking ahead: The first INSTEX shipment of medical supplies comes at a crucial time for Iran. But in the long term, it remains highly unlikely that INSTEX will lead to increased trade with European firms who are still deterred by extensive US sanctions.
- Despite the E3 move to supply aid, the UK, France and Germany have expressed their opposition to Iranian violations of the JCPOA nuclear deal and urged Iran to move back into compliance after triggering the dispute mechanism within the deal.