German FM: EU needs payment systems independent of US to keep Iran deal alive

German Foreign Minister Heiko Maas during the beginning of a meeting of the German Federal cabinet at the Chancellery in Berlin, Germany, 15 August 2018. [EPA-EFE/CLEMENS BILAN]

Europe needs to set up payment systems independent of the United States if it wants to save the nuclear deal between Iran and major powers that was abandoned by President Donald Trump, German Foreign Minister Heiko Maas has said.

He wrote in the Handelsblatt business daily: “It is indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund and an independent SWIFT system.”

The Belgium-based SWIFT global payment network that facilitates the bulk of the world’s cross-border transactions shut out Iran in 2012 after the United States and EU agreed to impose sanctions on the Islamic Republic over its nuclear activities.

The 2015 agreement between Iran and world powers lifted international sanctions. In return, Iran agreed to restrictions on its nuclear activities, increasing the time it would need to produce an atom bomb if it chose to do so. It has long denied having any such intent.

When Donald Trump withdrew from the agreement in early May he reimposed “the highest level of economic sanctions.” The US government has also demanded that businesses in allied states discontinue all dealings with Iran.

The US approach has been effective: banks operating in Iran have started to close their operations and withdraw funds back to their states of origin. So far no EU or US bank has declared itself willing to take on Iranian business, leading calls for an institution to step forward and make investments into the troubled country.

Amid the turbulence, Maas wants to consider the opportunity of expanding Europe’s fiscal independence from the US with a view to making new investments into Iran.

Empower a German ‘Iran Bank’ to save Iran’s nuclear deal

The prospect of securing major private-sector investments could offer Iran an incentive to uphold its side of the nuclear agreement despite Washington’s withdrawal. Laura von Daniels argues that a private German Iran Bank could do the trick.

Dr. Laura von Daniels …

However, many European firms are wary of far-reaching U.S. financial penalties despite Iran’s pleas to Europe this week to speed up efforts to salvage the nuclear accord after French oil group Total formally pulled out of a major gas project.

The EU has vowed to counter Trump’s renewed sanctions on Iran, including by means of a new law to shield European companies from punitive measures.

“Every day the deal is alive is better than the highly explosive crisis that would otherwise threaten the Middle East,” he added in the article published on Wednesday (22 August).

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