Iran-focused SPV on Anvil, to Bypass U.S. Sanctions

IndraStra Global

Iran-focused SPV on Anvil, to Bypass U.S. Sanctions

By IndraStra Global News Team

Iran-focused SPV on Anvil, to Bypass U.S. Sanctions

On September 26, 2018, An Iran-focused Special Purpose Vehicle (SPV) has been revealed to be under consideration, to facilitate trade with Iran by the European Union’s foreign policy chief, Federica Mogherini. This SPV could be in place "before November."

"Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil," - The announcement came in a statement by Iran and the five remaining parties to the 2015 Iran nuclear deal — EU members Britain, France, and Germany, along with Russia and China.

Exact details of the SPV, its scope, and operating mechanisms are yet to be provided. Mogherini advised that the new entity would facilitate payment flows related to Iran by acting as a "clearing house", including those for oil exports, as long as the transactions were deemed legitimate under EU law. Once the full range of sanctions takes effect, the SWIFT transaction system may close off access for Iranian banks. 



Even as she said she continues to consider the United States the EU’s strongest ally, Mogherini said: "no sovereign country or organization can accept that somebody else decides with whom you are allowed to do trade with."

This particular Iran-focused SPV could breathe a second life into the 2015 Joint Comprehensive Plan of Action (JCPoA), the Iran nuclear deal, and was sought by Tehran in order to counter the reimposition of sanctions triggered by the US's exit from the deal.

However, the Trump administration has urged the EU to abide by U.S. sanctions being reimposed on Iran and has warned that entities who trade with Iran in violation of those restrictions will face secondary U.S. sanctions. The danger of American penalties could still be too great for major multinational corporations to use this new SPV arrangement, analysts warned. A company found to be in violation of sanctions on Iran could lose access to the U.S. market and the U.S. financial system, which would be a serious blow for any large firm. 

With reporting by Deutsche Welle and Reuters