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Iran says never relied on INSTEX as Europeans announce liquidation of trade system

E3 announced the official shutdown of INSTEX as Europeans keep failing to honor their commitments under the 2015 Iran nuclear deal.

Tehran says it never relied on INSTEX, a European financial channel designed to safeguard Iran’s economic interests against US sanctions, after the UK, France, and Germany (the E3) issued a joint statement announcing the liquidation of the fruitless instrument.

In a joint statement on Thursday, the E3 announced that the INSTEX shareholders – Belgium, Denmark, Finland, France, Germany, the Netherlands, Norway, Spain, Sweden, and the UK – have decided to liquidate the instrument.

Following the United States’ unilateral, illegal withdrawal from the Iran nuclear deal in May 2018, European governments made commitments to secure Iran’s economic interests under the deal by adopting the required measures. One of the mechanisms that they announced in 2019 was the establishment of INSTEX as a financial channel to facilitate trade between Iran and Europe.

Although the Islamic Republic of Iran had “never relied” on this mechanism, it spared no effort to cooperate for activating the channel, Foreign Ministry spokesman Nasser Kana’ani said on Friday in reaction to the E3 statement.

“Unfortunately, European governments failed in launching INSTEX effectively … and they did not implement the necessary measures for activating the instrument,” he said.

“Tehran had never pinned hope on INSTEX as it has been conducting its international trade through other international financial and banking channels,” Kan’ani explained. Laying the fault on Iran in the liquidation statement is a “vain attempt to cover up the absolute failure of Europe in having the minimum monetary independence from the US,” he added.

The main reasons for the failure of the INSTEX are “lack of serious will” and “inability” on the part of the European governments in honoring their commitments to compensate for the US pullout from the Joint Comprehensive Plan of Action (JCPOA), noted the diplomat, adding that the Europeans have been instead following the US’ illegal sanctions against Iran.

Proof of their inaction, according to the spokesman, is that they did not provide any financial resources or long-term lines of credit to the instrument.

Founded in late January 2019, the Instrument in Support of Trade Exchanges (INSTEX) was a non-dollar direct payment channel that aimed to keep the nuclear deal with world powers alive, but it did not become operational effectively as it faced pressure from the United States.

The first and only registered transaction under the system was conducted in March 2020, when medical supplies were delivered to the Islamic Republic amid the coronavirus pandemic.

The system was launched after Iran complained that the European countries had failed to maintain trade with the country as mandated under the nuclear deal, and bowed instead to Washington’s pressure.

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