Will Instex be a solution to Iran sanctions?

At the end of 2018, the United States withdrew from the Joint Comprehensive Plan of Action (JCPOA), an agreement with Iran related to its nuclear activities. The JCPOA has been adopted in 2015 by the United Nations Security Council and since mid-January 2016, most EU and UN sanctions were lifted. The decision of US administration has put the EU in a difficult position.

While the EU wants to keep business relations with Iran alive, it doesn’t want to pour more fuel into the fire that has been started on the international trade scene. On 31^st January 2019, representatives of the United Kingdom, France and Germany announced that they want to create a trade mechanism that would allow European companies to trade with Iranian counterparts without violating the sanctions. The so-called INSTEX mechanism – Instrument in Support of Trade Exchanges – should facilitate legitimate trade with Iran. While, according to the founding countries, INSTEX is not in conflict with the US sanctions, American president, Donald Trump, made it clear to the EU, that companies taking advantage of INSTEX could expect restrictions in the US market. Czech businesses do not agree with the withdrawal of the USA from the JCPOA and support the position of the EU. Continuation of the implementation of the JCPOA is a way to keep EU-Iranian business links alive, given that the Iranian side will stick to the principles agreed in the JCPOA. On the other hand, Czech businesses are aware of current tensions in the global trade environment and are against a worsening of the situation. If INSTEX proves to be a legitimate mechanism that would not violate US sanctions against Iran, it shouldn’t be a precondition for applying retaliatory measures against companies that want to make business both with Iranian and American counterparts. Therefore, we hope that the EU and the US will find a common ground in this matter and that European companies will be able to do business with both the USA and Iran.