European Union pledges 'legal entity' for trade with Iran

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Iranian Minister of Foreign Affairs Mohammad Javad Zarif (center) and political deputy at the Ministry of Foreign Affairs of Iran Abbas Araghchi take part in a Comprehensive Plan of Action (JCPOA) ministerial meeting on the Iran nuclear deal on July 6, 2018, in Vienna, Austria.

As tensions between the USA and Iran continue to escalate, the White House is not ruling out the possibility of a face-to-face meeting between President Trump and his Iranian counterpart.

Five world powers and Iran agreed late Monday to establish a financial facility in the European Union to facilitate payments for Iranian imports and exports including oil, a key move sought by Tehran following the USA pullout from the 2015 nuclear deal and its re-imposition of sanctions.

The European Union, along with Russian Federation and China, said in a joint statement that the so-called "Special Purpose Vehicle" will "assist and reassure economic operators pursuing legitimate business with Iran".

Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil.
Several European officials said the new system has been created, which is akin to the barter system.

European Union foreign policy chief Federica Mogherini told reporters after the closed-door ministerial meeting that the financial facility is also aimed at preserving the nuclear agreement.

Many diplomats and analysts, however, are sceptical such a vehicle could ultimately thwart USA sanctions given that the United States could amend its sanctions laws to prohibit such barter transactions.

The Joint Comprehensive Plan of action, as the nuclear deal is officially known, was negotiated during the United States presidency of Barack Obama.

Zangeneh said such a plan isn't possible long-term, though Washington seems determined to cut Iran's crude exports, "even if for just a month".

The crux of the deal, negotiated over nearly two years by the administration of former U.S. President Barack Obama, was that Iran would restrain its nuclear program in return for the relaxation of sanctions that had crippled its economy.

On Tuesday, Mr. Trump's address to the world body is expected to focus heavily on Iran and the threat he says the Islamic Republic poses to Middle Eastern stability through its support for proxy forces in Syria, Lebanon and elsewhere.

The impending return of US sanctions has contributed to a slide in Iran's currency. US officials say they are ramping up pressure on allies and adversaries alike with a goal of shutting down all Iranian oil and gas exports by November 4, following Mr. Trump's decision to pull out of the global nuclear accord with Tehran in May. The rial has lost about two-thirds of its value this year, hitting a record low against the USA dollar this month.

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