EU and Iran have agreed to continue trade after the US withdrawal from the nuclear deal.
To circumvent US sanctions they recently announced a plan for maintaining payment channels outside the banking system which could be targeted by the sanctions. Whether it is legally and practically feasible is still an open question.
For the time being the work is in a preparatory phase and no details about the planned mechanism have been disclosed.
Asked by the Brussels Times at press briefing, on 11th of October, in Brussels whether EU had verified the legality of the new payment mechanism, a spokesperson for the European External Action Service replied that Mogherini had been clear and only confirmed that the work was still on-going.
A source in the European Central Bank said that so far there has been no formal consultation on the plan. “Usually we are consulted on planned legal acts that concern the financial sector but not on other legislative acts and not on initiatives that are outside the formal EU decision making processes.”
As a Special Purpose Vehicle would not be a bank, it does not require a banking license from the central bank. It is reportedly supposed to work as a barter system, where Iranian oil would be traded for European goods without money being exchanged.
Some analysts are skeptical that such a mechanism will work. European companies can still be sanctioned for trading with Iran and many of them have already decided not take any risks.
The companies will have no way of getting money in and out of the mechanism, whatever its construction, without involving the banks. The banks can then in their turn face US penalties. The US treasure stated that it “will carefully review alternative measures being considered to circumvent our sanctions.”