The reimposition of secondary US sanctions and the consequent hesitation of international banks, European export credit agencies and enterprises to engage Iran have severely undermined the potential for Iran-EU trade. The establishment of the Instrument to Support Trade Exchanges (INSTEX) can be seen as a positive step forward, but it is yet to become operational. In the meantime, opportunities are missed on all sides without a comprehensive strategy among governments and business associations. As such, there is a need for a road map to sustain segments of Iran-EU trade and investment ties that can contribute to the crucial political relations between the two sides.
Per Fischer, the German CEO of INSTEX, traveled to Tehran on March 12 to meet with business and political leaders in order to “clarify the ambiguities” about the payment mechanism. There are still a lot of questions about how INSTEX will work, but it is designed to essentially act as a trustee and administrator of funds related to Iranian exports that would be used for Iranian purchases of goods and services in Europe. Now, all stakeholders are awaiting the operationalization of this entity to assess its impact. At the same time, it is valid to argue that INSTEX has fallen short of Iran’s initial expectations.