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February 4, 2019 5:04 pm

Future of Iran Nuclear Deal Again in Doubt, as Tehran Regime Denounces EU’s ‘Humiliating Conditions’ for Global Trade Mechanism

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A display featuring missiles and a portrait of Iranian Ayatollah Ali Khamenei is seen at Baharestan Square in Tehran, Sept. 27, 2017. Photo: Nazanin Tabatabaee Yazdi / TIMA via Reuters.

New doubts about the survival of the 2015 international nuclear deal with Iran emerged on Monday, as the head of the Islamic Republic’s judiciary slammed the EU for imposing “humiliating conditions” on a new trading mechanism designed to circumvent US sanctions on the Tehran regime.

Ayatollah Sadeq Amoli Larijani told a gathering of judges in Tehran on Monday that the EU was insisting on Iranian agreement with two key demands before implementing INSTEX, a special financial channel developed by France, the UK and Germany that would allow Iran to continue trading despite tough US sanctions that went into action on Nov. 1.

Announced last week with great fanfare in the Iranian official media — “Defying US, Europe Launches Payment Channel with Iran,” read one headline on state broadcaster PressTV — Iran’s leaders seemed far less enamored with INSTEX this week, after Larijani claimed the EU had set what he called “two strange conditions” for making the mechanism operational.

According to Larijani, the EU wants Iran to join the Financial Action Task Force (FATF) — an intergovernmental body established in 1989 to counter terrorism financing, money laundering and other threats to the global financial system. The FATF currently has 38 member states, the newest being Israel, which joined the body in December.

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The EU also wants Iran to end its ballistic missiles tests in order to enable INSTEX, Larijani said.

“These European countries must know that the Islamic Republic of Iran will by no means accept these humiliating conditions, and will not give in to any demand in return for a small opening in the sanctions like INSTEX,” Larijani declared before the assembled judges.

Following the US withdrawal from the 2015 nuclear deal last May, Iran has reluctantly remained a partner to the agreement along with France, Germany, the UK, Russia and China. Tehran has stressed that its continued adherence to the deal requires the EU to guarantee that Iran’s global trade will not be affected by US sanctions. INSTEX is the financial mechanism proposed by the EU for securing this end following several months of negotiations.

An analysis of INSTEX by the Financial Times on Monday noted that “details of how it would work are still vague,” but the arrangement appears not to allow for Iran’s participation in international financial transactions.

The FT said its central idea was “to oversee a so-called mirror image transaction system.”

“Under this model, a European fuel trader buying Iranian oil could be matched with a European manufacturer selling machinery to an Iranian company,” the FT explained. “The European oil buyer would not pay the Iranian seller but would instead send its payment to the European manufacturer. At the same time in Iran, the Iranian machinery buyer would not pay the European seller but would instead send its money to the Iranian oil seller. The system would require Iran to set up its own equivalent of INSTEX — a process that might face both logistical and political obstacles.”

Meanwhile, in a rare joint statement on Iran on Monday, the EU said that it was “gravely concerned by Iran‘s ballistic missile activity and calls upon Iran to refrain from these activities.”

Iran continues to undertake efforts to increase the range and precision of its missiles, together with increasing the number of tests and operational launches,” the statement said. “These activities deepen mistrust and contribute to regional instability.”

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