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Trump To Unleash Hell On Europe: EU Announces Channel To Circumvent SWIFT And Iran Sanctions Is Now Operational

Via Zerohedge


With the world waiting for the first headlines from the Trump-Xi meeting, the most important and unexpected news of the day hit moments ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.

Following a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by US, French, British and German officials said the trade mechanism which was proposed last summer and called Instex, is now operational.

As a reminder, last September, in order to maintain a financial relationship with Iran that can not be vetoed by the US, Europe unveiled a “Special Purpose Vehicle” to bypass SWIFT. The mechanism would facilitate transactions between European and Iranian companies, while preventing the US from vetoing the transactions and pursuing punitive measures on those companies and states that defied Trump. The payment balancing system will allow companies in Europe to buy Iranian goods, and vice-versa, without actual money-transfers between European and Iranian banks.

The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called  “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.”

Until today, Tehran was skeptical about EU’s commitment to the deal and threatened to exceed the maximum amount of enriched uranium allowed it by the deal after US had imposed a series of sanctions on the country.

Meanwhile, opponents of Instex – almost exclusively the US – have argued that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.

The announcement sent oil sharply lower, with crude futures falling about $1/bbl in closing minutes before settlement, extending daily loss, as it means Iran now has a fully functioning pathway to receive payment for oil it exports to anyone it chooses.

The announcement will likely send president Trump off the rails, because in late May Bloomberg reported that as part of Trump’s escalating battle with “European allies” over the fate of the Iran nuclear accord, he was “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions” including the loss of access to the US financial system.

According to Bloomberg, the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.

“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in an ominous letter to Instex President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Germany, France and the U.K. finalized the Instex system in January, allowing companies to trade with Iran without the use of U.S. dollars or American banks, allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

“This is a shot across the bow of a European political establishment committed to using Instex and its sanctions-connected Iranian counterpart to circumvent U.S. measures,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies in Washington.

Here is a simpler summary of what just happened: this was the first official shot across the bow of the USD status as a global reserve currency, and not by America’s adversaries but by its closest allies. And once those who benefit the most from the status quo openly revolt against it, the countdown to the end of the USD reserve status officially begins.

* * *

When asked to comment on the letter, the Treasury Department issued a statement saying “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.”

The US ire was sparked by the realization – and alarm – that cracks are appearing in the dollar’s reserve status, opponents of Instex argue – at least for public consumption purposes – that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.

Separately, during a visit to London on May 8, Mike Pompeo also warned that there was no need for Instex because the U.S. allows for humanitarian and medical products to get into Iran without sanction.

“When transactions move beyond that, it doesn’t matter what vehicle’s out there, if the transaction is sanctionable, we will evaluate it, review it, and if appropriate, levy sanctions against those that were involved in that transaction,” Pompeo said. “It’s very straightforward.”

In conclusion, one month ago we said that “In 2018, Europe made a huge stink about not being bound by Trump’s unilateral breach of the Iranian deal, and said it would continue regardless of US threats. But now that the threats have clearly escalated, and Washington has made it clear it won’t take no for an answer, it will be interesting to see if Europe’s resolve to take on Trump – especially in light of the trade war with China – has fizzled. ”

The answer, it appears is that Europe felt unexpectedly emboldened, just hours before Trump’s meeting with Xi, and that it is ready and willing to call Trump’s bluff; it goes without saying, that if the US does indeed retaliate and proceed with sanctions against European banks, than the global trade war is about to turn far, far uglier.

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BobValdez
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BobValdez

Got the popcorn ready and the fridge full of beer. Let’s get ready for the ride……………………. 😀

Hmmm
Guest
Hmmm

This reminds me of a style of driving I learned years ago when maneuvering through Mexico City traffic. Avenida Juarez has many rotundas (traffic circles) with multiple ‘feeders’ (spokes). The typical way to access the very ‘kinetic’ main traffic flow was for a convoy of cars to line up and then through almost a ‘telekinetic; signal from the lead car, they’d all enter the circle at once, forcing an opening. Strength in numbers. Same with the ‘international flow of dollars’. Once enough line up in a convoy of alternate vehicles and receive that ‘signal’, not much the flow can do… Read more »

Agent M
Guest
Agent M

If this is indeed true, then Alex M was wrong in his analysis that EU won’t risk making the US angry and losing the US market in exchange for doing business with Iran.

Agent X
Guest
Agent X

There can be no right or wrong in Political Science, which is about as much a true science as Scientology. It’s all only an educated guess based on the best information at hand.

Personally, I think reading Jane Goodall’s ‘Observations on the Lower Primates’ is a far better introduction to the behavior of the political classes as anything taught in PolySci.

gwynn oneill
Guest

Thank you,I will go for it, “Observations on the Lower Primates” Excellent, we can see lower primates as they are ,while it is humiliating to see ourselves in the same behavior as theirs. But, like me,some of us get so curious as to our behavior that we press on to try to understand, embarrassing behavior or not.

Freedom of Expression
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Freedom of Expression

Well, I do admit to making up the title but the gist remains. Politics is 90% monkey business and maybe on occasion, if we’re lucky……10% higher order thought. MSM though, is 100% monkey business these days, so pick your banana.

Guy
Member
Guy

Go for it .Use Instex .Let the games begin .If the US is that ignorant that it can’t see the writing on the wall ,they will find out the hard way.The sanctions and tariffs game is the boomerang coming right back at them.

Black Picard
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Black Picard

I’m sorry, but “European” voters are fcuking STUPID if they can’t see that their “leaders” are compromized (damaged goods). None of this sh!t would be happening if it weren’t for crooked, traitorous “European” politicians who kiss NWO globalist/bankster ass like its going out of style. Europe’s biggest problem? They fear getting locked out of ZOG Amerika’s domestic economy where the average Amerikan can’t even save 2 months of salary for a rainy day. Amerikans are the most indebted slaves on planet Earth. Who would want to sell them anything for worthless FRNs that aren’t backed by anything? All the EU… Read more »

Magic Man In the Sky
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Magic Man In the Sky

You forgot Jew Tube.

Vera Gottlieb
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Vera Gottlieb

How much longer will “rational” people tolerate being threatened, blackmailed, etc. by Trump? Has the West lost the balls to stand up to this bully? How much longer are so many going to continue being in awe of this person that can only think of itself, for itself? Are we that brainwashed that we accept all this without a whimper?

The Art of the Bluster
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The Art of the Bluster

Actually, I think most people actually are standing up to Trump’s bullying, because they already understand it as just so much bluster. They go on about their business as usual and wait ’til he’s all blustered out and moved on to another bluster, then actually they sit down much later and maybe consider some negotiation, some bones to throw into the ring, to come up with some actual give and take. I’ve been watching this guy. This ‘negotiating tactic’ of his actually has some merit, albeit crude to the max, to it. Time will tell if it’s actually created more… Read more »

Bob
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Bob
Tales From the Infernal Optimist
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Tales From the Infernal Optimist

I jumped for joy when Clinton went down in defeat. Now I just desperately look for reasons why the glass might on occasion be half full.

Antipropo
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Antipropo

Europe and others lost their collective balls in 1947/48, when initial voting for partition of Palestine could not muster an affirmative but the US literally bullied and threatened ountries into changing their position. The rest is the ugly history of the Middle East.

Flederstein
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Flederstein

Not Trump but the US , Trump – or the US degeneracy in the Trump era – just made it so blatant. As for the EU they’ve been emasculated and occupied since 1945.

Olivia Kroth
Guest

True Flederstein. I cannot stop wondering why the EU is such a weak, sickly entity. Am I too naive?

Magic Man In the Sky
Guest
Magic Man In the Sky

The Jewropean Jewnion and the Jewnited States are both occupied. So is the mother-ship, the Jewnited Kikedom.

Eric
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Eric

Maybe passing this along could help. Seems as good a try as any to stave off nuclear annihilation for a few minutes. Cheers, Eric Here is an open letter to President Trump. Please circulate widely, especially if you have a good Twitter account: Dear President Trump, I have 3 or 4 questions that I’d like to ask you. I will try to be brief: 1. Now that you are President, are you getting laid more than you were before? For instance, when you were a candidate, or a TV star? 2. I know that Sheldon Adelson has a lot of… Read more »

Antipropo
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Antipropo

I recently read another article which proposed an alternative reason for the US-aided by a number of European countries- overthrow and destruction of various countries. It ties in with a theme here. It’s not only about the oil and other resources, it’s about those countries proposing to and moving away from the $US as the reserve currency. For example Gaddafi proposed a pan African currency backed by gold, Venezuela seeks to trade in national currencies for oil via agreed exchange rates. It was the US decision to drop the gold standard which led to the de facto $US or “petro… Read more »

M4A MMT
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M4A MMT

The Bretton Woods was hardly a gold standard. Ordinary citizens couldn’t convert their dollars to gold, only foreign central banks who owned dollars could convert them into gold. Bretton Woods ended in ’71. At the time, the US was busy with all its wars around the globe that, had it stayed in that international fixed exchange rate system, it would have went bankrupt. Not wanting that, Nixon allowed the USD to float freely according to demand, and thus the US was able to run permanent fiscal and trade deficits without being forced to miss any payment. Countries like Japan and… Read more »

The Asian Century
Guest
The Asian Century

Yet, those same countries would not be adverse to seeing the euro fill any vacuum left by the dollar. That’s why il mondo politico is such a dysfunctional beast., endlessly at odds with itself.

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