Global Geopolitical Series: EU’s Iran-focused SPV to be ready by November for third parties

Iran’s foreign minister Javad Zarif had a meeting with his foreign counterparts to the Joint Comprehensive Plan of Action (JCPoA) on the sidelines of the last week’s United Nations General Assembly in New York and so far it seems that the European partners (Germany, France, and the United Kingdom), along with China and Russia are determined to save the nuclear agreement from the wrath of Donald Trump, who pulled the United States out of the agreement earlier this year and has promised to impose of harshest of sanctions, with first tranche of sanctions already imposed in August and the rest to go by November.

Iran, alongside, European foreign policy chief Federica Mogherini announced that a special purpose vehicle is being created in collaboration with the EU with the sole aim to protect European companies from U.S. sanctions. The vehicle was first mentioned in public on September 24th. While the statement then lacked technical details, which according to all parties are being worked out.

Latest reports suggest that mechanism has now been completely negotiated and is set for implementation before the rest of the U.S. sanctions go live in November, specifically targeting Iran’s oil exports.

One of the key element of this SPV is that third-party countries will also be able to use the mechanism, protecting Iranian oil exports, which according to high-ranking Iranian officials would be ready by November.

The current feud between the United States and Iran would truly test the reach of the U.S. financial grip and the importance of U.S. dollar in global transactions.