Prompted by the United States’ unilateral withdrawal from the nuclear deal with Iran (the Joint Comprehensive Plan of Action or JCPOA), the remaining signatories are urgently seeking ways to maintain the agreement—both for strategic reasons and to preserve its trade benefits. A British, French, and German proposal to launch an independent channel for maintaining trade with Tehran, however, is unlikely to succeed and risks undermining the effectiveness of European economic sanctions.
The three European countries (also known as the E3) are reportedly pursuing the establishment of a special purpose vehicle (SPV) to evade US sanctions and ostensibly maintain legitimate trade with Iran. The proposed SPV would essentially act as an accounting firm, tracking credits against imports and exports without the involvement of European commercial or central banks. For example, Iran could ship crude oil to a French firm, accumulating credit that could then be used to pay an Italian manufacturer for goods shipped the other way —without any funds traversing through Iranian hands. By using credits instead of cash, the SPV would not require any funds to transfer outside of the European Union (EU). Supporters of the proposal contend the SPV would keep such funds safe from the reach of US sanctions.
Read the full piece at the Atlantic Council.