European Union Announces Legal Entity To Allow Trading With Iran While Evading US Sanctions

| September 25 , 2018 , 12:48 IST

In a bid to avoid US sanctions on dealing with Iran, the European Union (EU) on Monday said its members would set up a legal entity in the form of a payment system as an alternative to US dollar to allow oil companies and businesses to continue trading with Iran without US sanctions.

The US, after announcing its withdrawal from the 2015 Iran Nuclear Deal earlier this year had stated that it would impose sanctions on any nation dealing with Iran, and warned India to reduce its oil imports from Iran, currently India's second largest oil supplier, down to zero by November.

The decision of the European Union and Iran in defiance of US President Donald Trump's administration was announced after high-level talks at the United Nations among the other members of the accord.

ALSO READ: Iran Replaces Saudi Arabia To Become India's 2nd Largest Oil Supplier

In a statement, the countries said they were determined "to protect the freedom of their economic operators to pursue legitimate business with Iran."

The new mechanism would "facilitate payments related to Iran's exports (including oil) and imports, which will assist and reassure economic operators pursuing legitimate business with Iran," the statement said.

EU foreign policy chief Federica Mogherini, speaking at the United Nations alongside Iranian Foreign Minister Mohammad Javad Zarif, said that the technical details were still being worked out.

"In practical terms, this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," she told reporters.

Mogherini added that the remaining members of the 2015 Iran Nuclear Deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), namely Britain, China, France, Germany and Russia would continue to maintain their commitments to support Iran on civilian nuclear energy.

ALSO READ: Political Sympathy Not Enough, Europe Should Take More Practical Steps, Says Iran

"The participants recalled that these initiatives are aimed at preserving the JCPOA, which is in the international interest," she said.

In May this year, many nations from the European Union (EU) expressed 'sympathy', to Iran after the withdrawal of US from the Iran Nuclear Deal, but Iranian Foreign Minister Mohammad Javad Zarif said political sympathy is "not enough".

During a meeting with the visiting EU's Energy Chief Miguel Arias Canete, Zarif said that the European Union should take more "practical steps" to guarantee the economic interests of Iran.

"With the exit of the US from the nuclear agreement, expectations from the European Union (EU) to preserve the achievements of the deal are high," Zarif had said.