Months before the USA sanctions on Iran's oil returned, the EU pledged to create a new payment system, the so-called special-purpose vehicle (SPV), that "will assist and provide reassurance to European businesses wishing to continue trading with Iran, mitigating the effect of re-imposed United States sanctions, in accordance with European Law".
The three European Union countries were among the eight signatories of the 2015 nuclear deal, which also included China, the European Union and Russian Federation.
The Instrument in Support of Trade Exchanges, or INSTEX, will initially be used to facilitate the sale of food, medicine and medical devices - all humanitarian goods that the U.S. government has previously said it has no problem with.
The Europeans say the first goods that Iran will receive include drugs and medical devices, which Iran needs.
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In a move sure to unleash fury from the Trump administration, the European Union has announced it has set up a transactions channel with Iran to bypass USA sanctions.
New US sanctions have largely succeeded in persuading European companies to abandon business with Iran, and Washington said it did not expect the EU effort to change that.
USA officials said they were following the situation but dismissed the idea that the new entity would have any impact on efforts to exert economic pressure on Tehran.
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But at some point, to avoid weakening the economy, it could slow that process or end it sooner than now envisioned. That message had sparked fears in financial markets that the Fed might tighten credit too aggressively this year.
Oil, Iran's main source of foreign exchange, will not be covered. The operationalisation of INSTEX will follow a step-by-step approach: The E3 together with INSTEX will continue to work on concrete and operational details to define the way the company will operate; the E3 will also work with Iran to create an effective and transparent corresponding entity that is required to be able to operationalise INSTEX.
"The way in which. the American administration makes policy in general at the moment, with a lot of sanctions, with the fact that global agreements are scrapped, is not a good way to cooperate", Annegret Kramp-Karrenbauer, the head of the ruling CDU party in Germany, told Bloomberg, a U.S. news agency, last week.
O'Toole said, for the immediate future, the new European financial vehicle should be enough to ensure that Iran continues complying with the terms of the Barack Obama-era nuclear deal, which capped Tehran's ability to enrich uranium and kept it from producing a nuclear weapon.
Theoretically, the payment channel would shield European companies from USA sanction-related penalties.
The EU this month imposed its first sanctions on Iran since the nuclear pact was signed, in response to ballistic missile tests and assassination plots on European soil.
A U.S. Embassy spokesperson in Germany warned that companies engaging in "sanctionable activity involving Iran risk severe consequences" but said the new organization would not in any way affect the U.S. campaign to apply maximum financial pressure on Iran.
Despite European efforts to preserve the nuclear deal, relations between Tehran and the EU have worsened.
The EU also added two Iranian individuals and an Iranian intelligence unit to its terrorist list.