Sputnik has asked Michael Tockuss, Executive Director of the German-Iranian Chamber of Commerce, how this could work.
Sputnik: Mr Tockuss, INSTEX is being called the European special purpose vehicle founded to circumvent US sanctions. What do you know about it so far?
Michael Tockuss: We know that the company is headquartered in Paris and that the key personnel are there. At the moment, there's an ongoing process of negotiating at the European level on the specific details of how the whole mechanism should work.
Sputnik: How is that supposed to work?
Michael Tockuss: It is going to be a form of settlement. For example, an Italian company imports something from Iran and therefore has to pay a certain amount to Iran. On the other hand, a German company wants to deliver some equipment to Iran. INSTEX would then meet the requirements of both companies. So there would be no international transfers. The payments would be only in Iran and in Europe (and thus the US sanctions wouldn't be violated).
Michael Tockuss: We do not know that yet — the authorities have just come to us. We are going to hold talks over the next few days, where we will try to decide on the ways to implement this idea. For me, it seems that no additional fees may arise for companies trading with Iran.
Sputnik: Do you think the idea can work?
Michael Tockuss: If it's designed correctly, it can work. One problem, however, is that initially only products from the so-called humanitarian sector — pharmaceuticals, medical technology, or food — will be allowed. In our view, this can only be the first step. For us, it's crucial that we provide better trade opportunities for industrial products.
Sputnik: What happens if the US sanctions a company? Could INSTEX then protect the company with a kind of insurance offsetting the costs?
Michael Tockuss: No, INSTEX won't pay any compensation or protect companies. But for a medium-sized company (in Germany alone from 5,000-7,000 companies do business with Iran) the danger of becoming the focus of the US is relatively low.
Sputnik: Could it be that large corporations would rather not deal with INSTEX and cave in to US sanctions?
Michael Tockuss: For the large companies that have refused to do any business with Iran (including making public announcements), the financial issue has never been the crucial point. These companies have a large number of branches in different countries and therefore they are quite flexible. These companies have withdrawn from Iran because they have either been pressured directly by the US or were concerned about reputational damage in the United States. This doesn't apply to most medium-sized companies.
Sputnik: Do you think there will be great interest in INSTEX among medium-sized companies?
Sputnik: I find it surprising that Britain is also involved here. Normally, the English follow Washington's guidelines.
Michael Tockuss: In the UK, there are a number of large trading houses, for example, dealing specifically with grain. And since there're almost no opportunities for transactions with Iran in the UK, I think it would be quite interesting for the UK to do that at the European level.
Sputnik: Is there any reaction from Washington to this EU initiative? The Americans usually don't like it when someone resists them.
Michael Tockuss: As always with Iran, the US is threatening to impose new sanctions and extend the existing ones. I would recommend not focusing too much on that. The Americans assume that the European companies that are interested in doing business with Iran will be afraid of tehm. In practice, however, there have only been contacts with large companies from the American side so far.
Sputnik: The whole thing is still in its infancy. But is the idea potentially viable for other US-sanctioned countries? Maybe there will be occasions when the EU needs alternative payment channels to the dollar.
Michael Tockuss: There are currently no concrete approaches. But you can hear in some ministries in Berlin that this could also be applied to other countries — partly for sanction reasons, but also simply because this way foreign exchange can be saved. With a positive development one can imagine that this will be extended to other countries.
Views and opinions, expressed in the article are those of Michael Tockuss and do not necessarily reflect those of Sputnik