Global Geopolitical Series: Global leaders take first step to ditch dollar in saving Iran nuclear deal

In a blow to the United States, and its desire to contain Iranian oil exports, the remaining parties to the Iran nuclear Agreement, which President Trump exit earlier this year have agreed to formally set up a payment system that would help in salvaging the agreement by bypassing U.S. sanctions.

European Union’s Foreign Policy Chief Federica Mogherini and Iranian Foreign Minister Mohammad Javad Zarif held a joint press conference on Monday night in New York to elaborate on the results of a meeting between the remaining parties of Joint Comprehensive Plan of Action (JCPoA), better known as the Iran nuclear Agreement; France, the UK, Germany, Russia, China, and Iran.

Here is the full joint statement,

“We just had a Ministerial Meeting of the [Foreign] Ministers of China, France, Germany, the Russian Federation and the United Kingdom, with me as well as the Islamic Republic of Iran. We agreed a Joint Ministerial Statement that I am now going to read in English. Minister [of Foreign Affairs of Iran, Mohammad Javad] Zarif will afterwards read the same text in Farsi.

I would like to add a word on the Special Purpose Vehicle, as I imagine this will raise questions from your side. The decision to establish it has been taken, also following extensive exchanges we had since the Joint Commission Ministerial Meeting on 6 July. Now another meeting of technical experts from Member States will be convened to take this work forward and operationalise the Special Purpose Vehicle at the technical level.  

In practical terms this will mean that EU Member States will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue trade with Iran, in accordance with European Union law, and could be opened to other partners in the world. You will get more technical information about that, as the technical work continues in the coming days.

Thank you!”

This is the first time since the beginning of Bretton Woods Agreement of 1972, a major SPV has been set up to ditch the sanctions imposed by the United States bypassing the dollar-based financial system, where several U.S. allies are participants Here, https://eeas.europa.eu/headquarters/headquarters-homepage/51036/implementation-joint-comprehensive-plan-action-joint-ministerial-statement_en you can get more details of the meeting.

The decision taken by the European Union along with China and Russia would truly test the reach of the U.S. financial system beginning November when the full set of sanctions on Iran would go live.

The action taken is likely to increase the friction between the United States and its traditional allies; European Union and the United Kingdom.