European leaders are putting a plan together to improve their country’s trade relations with Iran, while avoiding US sanctions.
The European leaders have created a “netting” mechanism which removes the necessity for financial institutions and banks to facilitate trade between European and Iranian companies. This allows European companies to avoid the strongest US sanctions, which would under other circumstances cause American businesses and institutions to be unable to engage in business with their European counterparts.
European companies that do business in Iran are still at risk of being affected by the US sanctions going forward. However, the companies that want to do business in Iran will be able to use the mechanism, known as the “special purpose vehicle”. The same companies that will continue with their Iranian business are also less likely to have major connections in the US or with the US dollar. Other companies that would use the mechanism may already be engaged in business with Iran which doesn’t fall under US sanctions. For example, the sale of pharmaceuticals for humanitarian purposes will likely continue unaffected. Tehran has cautiously welcomed the move as a “first step.”