Washington is ready to impose sanctions against the European financial settlement (INSTEX) mechanism, which would allow trade to continue between the EU and Iran, US Special Representative to Iran Brian Hook warned on Thursday.
The financial channel, which was announced by Germany, France and the UK in January, is aimed to enable “legitimate trade” with Iran in the wake of US sanctions against the Islamic Republic.
In call, US’ Hook says still doesn’t believe INSTEX will get interest from European companies. And says sanctions would only apply if it were used for sanctionable trades, NOT for “permitted transactions” — food, agri, medical devices, medicine. @eu_eeas
— laurence norman (@laurnorman) May 30, 2019
“If this mechanism starts working … We are ready to impose sanctions on any activity subject to restrictions,” Hook said during a telephone briefing.
The US representative voiced doubts that Tehran would be able to build a “mirror mechanism” to ensure transactions from its side. Washington doesn’t see any demand from businesses for incorporation into such a mechanism, Hook noted.
Hook says U.S. doesn’t see any corporate demand for INSTEX and that it would sanction any sanctionable behavior,
— Golnaz Esfandiari (@GEsfandiari) May 30, 2019
Bloomberg had reported earlier that the US Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that INSTEX and anyone associated with it could be barred from the US financial system, if it goes into effect.
Sources told the media that European envoys had earlier downplayed the significance of the payment mechanism, in discussions they’d held with the White House. Washington, however, has decided that the three largest EU powers (France, Germany and the UK) were far more serious about it than they had originally said.
The US has been warning businesses, government officials and staff working to set up the mechanism about the consequences they face if they continued to do business in Iran, the sources said.
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