The Latest Developments on INSTEX

The Instrument in Support of Trade Exchanges (INSTEX) is a European special-purpose vehicle (SPV) established in January 2019. Its mission is to facilitate non-USD transactions and non-SWIFT to avoid breaking U.S. sanctions. It was particularly established in order facilitate trade exchange with Iran following recent US sanctions and to encourage Iran to remain committed to its commitments under JCPOA. It was introduced on January 31 by France, Germany and Britain, the three countries party to the 2015 nuclear deal.

INSTEX is supposed to be a financial channel and a special mechanism for transferring money in spite of U.S. sanctions on Iran. Its objective is to facilitate Iran’s transactions with European companies.

On March 20, Iran’s central bank governor Abdolnaser Hemmati announced that a mechanism similar to INSTEX has been registered in Iran, officially called the Special Trade and Finance Institute (STFI).

Now according to the latest developments and based on a report by Tehran Times, six other European countries, namely Belgium, Denmark, Finland, the Netherlands, Norway and Sweden decided to join this mechanism in late November 2019.

The statement, published by the Foreign Ministry of Finland, reads as follows:

“In light of the continuous European support for the agreement and the ongoing efforts to implement the economic part of it and to facilitate legitimate trade between Europe and Iran, we are now in the process of becoming shareholders of the Instrument in Support of Trade Exchanges (INSTEX) subject to completion of national procedures. INSTEX was established by France, Germany and the United Kingdom in January 2019,”

Despite these official statements, from Iran’s perspective, INSTEX’s mechanism has not been operationalized yet.

Submitted by: Dr. Mahnaz Mehrinfar & Dr. Shahin Fadakar