The foreign ministers of Britain, France and Germany announced a new mechanism to help trade with Iran despite U.S. sanctions as a sign of their commitment to the 2015 nuclear deal with Tehran.
"It is a political act," French Foreign Minister Jean-Yves Le Drian told reporters after a meeting of EU counterparts in Bucharest. "It is a gesture to protect European companies."
Britain's Jeremy Hunt said the three countries were working closely with Tehran to finalize arrangement to allow for humanitarian, pharmaceutical, agricultural and consumer trade.
"Registration is a big step, but there is still more work to be done," Hunt said.
The plan has long been in the development stages, but the German dpa news agency reported on January 30 that the special mechanism was ready to be officially launched, focusing on areas not targeted by U.S. sanctions.
The three countries announced the registration of the so-called special-purpose vehicle (SPV), renamed as INSTEX - Instrument In Support Of Trade Exchanges to run a payments channel that would allow goods to be bartered between European and Iranian companies without the need for direct financial transactions.
Iranian Deputy Foreign Minister Abbas Araqchi said on Thursday the mechanism was a good first step.
The European powers must now establish a budget for INSTEX and define its rules. Iran must also set up a mirror company.
"It seems that Iran should set up the same system inside Iran to organise rial transactions for Iranian companies," Araqchi was quoted as saying by the semi-official Tasnim news agency.
The U.S. Embassy in Germany said it did not expect INSTEX to blunt its effort to pile economic pressure on Tehran.
Germany, France, and Britain -- which signed the nuclear deal along with the United States, Russia, and China -- have been working hard to keep the accord alive after U.S. President Donald Trump announced in May he would withdraw from the deal and reimpose sanctions on Tehran.
The EU is backing the trade mechanism but is not directly involved, officials said. The measures involved are designed to protect European firms from U.S. court action and allow them to recover any financial damages related to the sanctions.
After negotiations with Iran, the three countries had planned to put the trade mechanism in place in November, but the countries struggled to find ways to minimize the risk of the U.S. sanctions for firms involved.
However, on January 28, German Foreign Minister Heiko Maas said that "we are on the verge of implementing our plan."
The goal is to ensure that the economic benefits provided to Iran under the 2015 deal remain sufficient for Tehran to keep abiding by the curbs placed on its nuclear program.
"We don't want Iran to leave this agreement and start the enrichment of uranium again," Maas said.
According to the U.N. nuclear watchdog, the International Atomic Energy Agency (IAEA), Tehran has so far abided by the terms of the deal in regard to nuclear development despite the U.S. withdrawal.
However, it has continued to test its ballistic missiles, which Washington and many in Europe say could eventually be fitted with nuclear weapons. Tehran insists the program is purely defensive.
Still, Europe is maintaining a tough line on Iran regarding the ballistic-missile program.
On January 25, France said it was ready to impose new sanctions on Tehran if talks on its missile program make no progress.