As reported here and elsewhere, the EU is considering the creation of a clearing house to keep trading with Iran despite US sanctions. Why is it not possible for the EU to conduct normal financial transactions with Iran without the involvement of US institutions?
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2 Answers
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Because the US has threatened to sanction European companies that trade with Iran. Most European companies that are interested in trading in Iran also trade with the US, so would be vulnerable to various kinds of sanctions.
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$\begingroup$ Sorry, but this is not an answer to the question. The clearing center is mainly for companies who want to trade with Iran only, not with the US. So the question is why a clearing center is even needed for them. There are several European financial institutions that should be able to facilitate financial exchange between Europe and Iran without US involvement. $\endgroup$– iuvbioNov 15, 2018 at 16:09
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$\begingroup$ Really? I'd love to see a source for that please. Also for the claim that there are European financial institutions that would be impervious to US sanctions. $\endgroup$– DanNov 15, 2018 at 16:34
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$\begingroup$ I heard it on Deutschlandfunk, don't have any written source unfortunately, but I'll try to find one. My claim was that there are institutions (BNPP for example) that could facilitate such an exchange, not that they're not susceptible to sanctions. I guess it boils down to whether sanctions would apply to service providers that do not take part in the actual trade. $\endgroup$– iuvbioNov 15, 2018 at 18:10
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$\begingroup$ There are reports that the US has threatened SWIFT, if they don't cut off companies that trade with Iran, for instance. Also "Since 2010, the DoJ has fined non-American banks some USD15bn for alleged global infractions of sanctions, anti-money laundering and antiterrorism rules. This includes an eye-watering USD8.9bn fine levied in 2014 against BNP Paribas over deals with Iran, Cuba and Sudan." $\endgroup$– DanNov 15, 2018 at 18:25
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$\begingroup$ Thanks, that makes more sense then. I still wonder why a clearing centre would be needed. Wouldn't it be possible and easier to set up a bank or financial service provider for that purpose only which does not interact with the US at all? $\endgroup$– iuvbioNov 15, 2018 at 18:35
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In this article it says that the key point of Instex (the now established SPV) is to clear information about transactions inside and outside of Iran that are then offset instead of clearing funds between the counterparties directly. In this way the US sanctions would not be violated. That said, apparently the uptake is very low, also because non-Iranian counterparties want to avoid upsetting the US.
