On the sidelines of the United Nations General Assembly, the European Union agreed with China and Russia to create a new financial institution to aid companies seeking to do business in Iran. They hope such trade will induce Iran to keep its end of a 2015 deal to restrict its ability to develop nuclear weapons. [...]
The “Special Purpose Vehicle” described in a joint ministerial statement would provide a way around the US banking system for companies seeking to purchase Iranian oil or sell goods there, allowing them to make payments back and forth.
Sanctions experts are skeptical that will be enough to bring commerce back to the country, given US willingness to apply economic punishments to companies no matter how they do business in Iran. The new financial vehicle would only be useful to companies that operate outside the US system.[...]
“That’s what people are concerned about—that people will move away from the dollar, or try to find ways to do trade other than going through the New York banks,” Smith says, cautioning that it is too early to know if this new mechanism will be a significant source of trade, much less a harbinger of economic change. “The fundamental story here is that the EU and US think about the world differently in this regard.”
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