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Khamenei's Outfit Signals Soft Attitude Toward Europe

The Strategic Foreign Relations Council set up by Iran's Supreme Leader Ayatollah Ali Khamenei says it is not in Iran's interest to take action about the slow pace of Europe's initiative to come up with a mechanism to allow trade while Iran is targeted by U.S. sanctions.

Following the U.S. withdrawal from the nuclear deal with Iran in May 2018, followed by new sanctions, major European countries promised Iran to set up a Special Purpose Vehicle (SPV) to allow trade on a barter model, rather than using normal banking transactions. However, so far Europe has failed to deliver.

The statement from an institution under Khamenei’s umbrella could mean he is unwilling or unable to up the ante against the West at this point.

Abdolreza Faraji Rad, the council's director general, told ISNA news agency that Europeans will have no excuse to delay the process if and when Tehran approves the four anti-corruption bills required by the Financial Action Task Force (FATF). Three of the four bills approved by the Iranian parliament have been rejected by the conservative dominated Guardian Council and await the final verdict by the country's Expediency Council.

The Strategic Council of Foreign Relations which was set up at Khamenei's order in 2006 is chaired by former foreign minister Kamal Kharrazi, who said during a 19 December visit to Europe that if European special trade arrangements are not implemented “it does not mean Iran will exit from the JCPOA [nuclear agreement]”.However, he had said a day earlier that if Europe does not deliver on its promises about facilitating trade with Iran, it will “suffer”.

Iranian officials, including foreign minister Mohammad Javad Zarif have in the past threatened to leave the nuclear agreement if Europe fails to help Iran with trade. His deputy, Abbas Araqchi said on November 30: "We believe that Europe must be given more time ... they have so far been unable to introduce operational measures, but we are not supposed to wait forever," he added.

The director general of the Strategic Foreign Relations Council now says, "Currently, Iran can sell part of its oil for some 6 months and trade with some countries with their national currency, so Europeans are waiting to see if they can get more accurate information." He did not explain what information Europe needed.

Faraji Rad added that the U.S. wishes to reduce Iran's oil export to nil while "Iran is under economic pressure," adding that in the meantime "The U.S. has become isolated."

He also said, "it is not in Iran's interest to take action about the U.S. withdrawal from the nuclear deal or the delay in facilitating the SPV while democrats have taken over the House of Representative in the U.S."

However, the record shows that Democrats and Republicans do not differ much when it comes to the Islamic republic; both in general advocating a tough line.

Meanwhile President Trump has warned America's European allies about the SPV, describing it as a "mistake." In the meantime, European countries such as Austria and Luxemburg have refused to host the SPV.

Members of the Strategic Council on Foreign Relations, an outfit set up by Supreme Leader Ali Khamenei. Kamal Kharrazi is center in gray suit.Undated
Members of the Strategic Council on Foreign Relations, an outfit set up by Supreme Leader Ali Khamenei. Kamal Kharrazi is center in gray suit.Undated

In Iran, on the other hand, some hardliners have been losing patience over Europe's delays. Saeed Jalili, a former Iranian nuclear official and a confidant of Iran’s Supreme Leader attacked the policy of relying on Europe to help Iran in trade and circumventing U.S. sanctions. Jalili, Khamenei’s representative to the influential Expediency Council said on December 18, "After seven long months, are the Western Europeans going to run the SPV and save the [nuclear] deal or not?"

European officials and Iran’s most senior nuclear official Ali Akbar Salehi expressed hope in December that by the end of the year Europe would deliver on a proposed mechanism to continue trade with Iran and save the nuclear deal. But the promise remained undelivered by the first week of January and there is very little prospect for a quick solution.

Nevertheless, Khamenei does not seem to have been left with too many options. While the council linked to Khamenei advises inaction in the face of delay in facilitating the SPV, this makes the passing of legislation required by FATF more likely as it looks like Khamenei is delegating the responsibility for giving in to economic pressures to apparatus such as the Foreign Relations Council and Expediency Council while trying keep his reputation as an uncompromising figurehead intact.

Interestingly, while Kamal Kharrazi, former foreign minister is on the council, and another, Ali Akbar Velayati is Khamenei's close advisor on foreign policy, both shied away from media spotlight on this occasion and handed over the task of making the compromising statement to a hitherto not well-known figure.