Skip to main content

Iran calls new European special payment mechanism ‘first step’

Iran called a new European initiative to establish a payment mechanism to facilitate trade a “first step” and hopes it will expand.
Iran's Foreign Minister Mohammad Javad Zarif attends a meeting with European Union's foreign policy chief Federica Mogherini, Britain's Foreign Secretary Boris Johnson, Germany's Foreign Minister Sigmar Gabriel and France's Foreign Minister Jean-Yves Le Drian in Brussels, Belgium January 11, 2018. REUTERS/John Thys/Pool - RC14575CD590

Europe has finally set up a Special Purpose Vehicle (SPV) to bypass US sanctions on Iran in order to keep alive the Joint Comprehensive Plan of Action (JCPOA), which the United States unilaterally exited in May 2018. INSTEX (Instrument in Support of Trade Exchanges) was established by Germany, France and the United Kingdom, and will be used initially to sell food, medicine and medical devices to Iran. It will be based in Paris, managed by a German banking expert and have a UK-led advisory board. It will ultimately allow trade to continue with Iran but will also likely anger the United States, which reimposed sanctions on Iran after exiting the JCPOA.

Abbas Araghchi, deputy foreign minister and one of Iran’s top negotiators for the JCPOA, spoke to Iranian media about INSTEX. “This is a special financial mechanism that the Europeans have been after for months,” Araghchi said. “The goal of this mechanism is so that all of the receipts and payments between Iran and Europe, imports and exports, go through this mechanism.” Araghchi said INSTEX will have “complete benefit” for Iran once other countries and non-European companies have access to it.

According to Araghchi, work still needs to be done on the finer details of INSTEX. “Exactly how this mechanism will work will be reviewed in expert meetings between us and the Europeans. Our Central Bank must enter talks with this mechanism and clarify how it will operate,” he said.

Araghchi also discussed continued US pressure on private European companies, saying, “The way we were informed is that European companies that want to conduct business with us will not be included in US sanctions, but American pressure is still there.” He said one reason the creation of INSTEX took time to create was due to “American threats to confront this mechanism.”

Confirming European media reports, Araghchi said INSTEX will begin with transactions on basic goods such as food and medicine. INSTEX was established “essentially for sanctioned goods — although [critics] say it was designed for nonsanctioned goods such as food and such things. … It’s possible it will start with these goods until a mechanism for payment is established, but essentially it is beneficial for sanctioned goods, and the purpose of this vehicle is for sanctioned goods.”

Araghchi added, “From our point of view, this is the first step of all the commitments that Europeans have committed to us.” He said INSTEX success will be based on whether it can “support” companies that want to conduct business with Iran, meaning “it is designed correctly and introduced to European companies correctly.”

Araghchi said it could take a month or two for INSTEX to be up and running with other European countries on board and the creation of a similar mechanism inside Iran. He added, “From a political view, the Europeans are looking for opportunities to have financial exchanges with Iran, but we have to see in action how this will go forward.”

Join hundreds of Middle East professionals with Al-Monitor PRO.

Business and policy professionals use PRO to monitor the regional economy and improve their reports, memos and presentations. Try it for free and cancel anytime.


The Middle East's Best Newsletters

Join over 50,000 readers who access our journalists dedicated newsletters, covering the top political, security, business and tech issues across the region each week.
Delivered straight to your inbox.


What's included:
Our Expertise

Free newsletters available:

  • The Takeaway & Week in Review
  • Middle East Minute (AM)
  • Daily Briefing (PM)
  • Business & Tech Briefing
  • Security Briefing
  • Gulf Briefing
  • Israel Briefing
  • Palestine Briefing
  • Turkey Briefing
  • Iraq Briefing

Premium Membership

Join the Middle East's most notable experts for premium memos, trend reports, live video Q&A, and intimate in-person events, each detailing exclusive insights on business and geopolitical trends shaping the region.

$25.00 / month
billed annually

Become Member Start with 1-week free trial

We also offer team plans. Please send an email to and we'll onboard your team.

What's included:
Our Expertise AI-driven

Memos - premium analytical writing: actionable insights on markets and geopolitics.

Live Video Q&A - Hear from our top journalists and regional experts.

Special Events - Intimate in-person events with business & political VIPs.

Trend Reports - Deep dive analysis on market updates.

All premium Industry Newsletters - Monitor the Middle East's most important industries. Prioritize your target industries for weekly review:

  • Capital Markets & Private Equity
  • Venture Capital & Startups
  • Green Energy
  • Supply Chain
  • Sustainable Development
  • Leading Edge Technology
  • Oil & Gas
  • Real Estate & Construction
  • Banking

Already a Member? Sign in

Start your PRO membership today.

Join the Middle East's top business and policy professionals to access exclusive PRO insights today.

Join Al-Monitor PRO Start with 1-week free trial