US belittles EU’s ‘special purpose vehicle’ as companies flee Iran

Iranians shop in a bazaar in Tehran, Iran, 5 November 2018. [Abedin Taherkenareh/EPA/EFE]

The United States is not too concerned by Europe’s idea for a special purpose vehicle (SPV) to get around US sanctions with Iran as companies are already withdrawing from the country in droves, the senior official for financial intelligence said.

“I think the bigger news in Europe is that companies are withdrawing from Iran in droves,” Under Secretary of the Treasury Sigal Mandelker told reporters in London when asked about the SPV idea.

“I am not concerned by the SPV actually at all,” she said. “I do believe we are going to find additional mechanisms by which we can work together.”

The restoration of sanctions is part of a wider effort by US President Donald Trump to force Iran to curb its nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.

In May, Trump exited Iran’s 2015 nuclear deal with six powers and Washington reimposed a first round of sanctions on Iran in August.

Trump slaps Europe in the face with Iran deal pull-out

In the aftermath of Donald Trump’s announcement to withdraw from the landmark deal curbing Iran’s nuclear programme, the leaders of Britain, France and Germany who signed the agreement published a joint statement, saying they will continue to stick by it.

Trump’s moves target Iran’s main source of revenue – its oil exports – as well as its financial sector, essentially making 50 Iranian banks and their subsidiaries off limits to foreign banks on pain of losing access to the US financial system.

The Islamic Republic, OPEC’s third-largest producer, called the US moves economic warfare, said they would hit ordinary Iranians and vowed defy the sanctions to sell oil to the world.

Voicing opposition to US policy on the day Washington announced a new raft of sanctions on Iran, the European Union earlier this month said it was setting up the so-called special purpose vehicle.

EU mechanism for Iran trade to be symbolically ready on 4 November

A new European Union mechanism to facilitate payments for Iranian exports should be legally in place by 4 November, when the next phase of US sanctions hit, but will not be operational until early next year, three diplomats said.

“I have do doubt that we will be able to find common ground because the threats are real and the threats are here in Europe,” Mandelker said. She said she hoped the United States and the EU could take joint disruptive action against Iran.

The United States, Mandelker said, would strictly enforce its sanctions on Iran. When asked what was next on Iran, she said: “On Iran, you are going to see a lot more from us.”

SWIFT, which facilitates the bulk of global cross-border payments, has already cut off the Iranian central bank and other financial institutions, Mandelker said.

“We believe SWIFT has made the right decision to disconnect those entities,” Mandelker said. When asked if that included the Iranian central bank, she said: “Yes.”

“We are going to strictly enforce our sanctions, and that’s a message we are sending loud and clear all over Europe to the private sector,” she said. “If there are those who decide not to abide by them then they are going to see action from us.”

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