Economic ministers from the EU’s 28 member states will gather in Brussels today for an Economic and Financial Affairs Council
Economic ministers from the EU’s 28 member states will gather in Brussels today for an Economic and Financial Affairs Council meeting.
Representatives will discuss the EU’s plan for circumventing US sanctions on Iran—the Special Purpose Vehicle (SPV). The SPV keeps Tehran from quitting the 2015 nuclear deal and would avoid sanctions by negating cross-border trade—European exporters to Iran would be paid by European importers from the Islamic republic.
The SPV faces numerous obstacles. For one, it is unlikely to facilitate the trade of oil, which accounts for some 80% of Iran’s exports. Major European businesses with American interests are also likely to boycott the system for fear of incurring sanctions from Washington.
With Iran’s economy expected to contract by 3.6% this year, there will be considerable pressure at home for Tehran to abandon the 2015 deal and recommence its nuclear programme—an outcome that could spark a regional arms race. Allowing the SPV to facilitate oil sales to Europe may lessen Iran’s economic woes and convince Tehran to honour the 2015 agreement, but could also attract sanctions from Washington. Thus, Europe faces a lose-lose situation.
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