The Instrument in Support of Trade Exchanges (INSTEX) is a European

special-purpose vehicle A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV; or, in some cases in each EU jurisdiction, FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limite ...

(SPV) established on 31 January 2019. Its mission is to facilitate non-

USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...

and non-

SWIFT Swift or SWIFT most commonly refers to: * SWIFT, an international organization facilitating transactions between banks ** SWIFT code * Swift (programming language) * Swift (bird), a family of birds It may also refer to: Organizations * SWIFT, ...

transactions with Iran to avoid breaking

U.S. sanctions After the failure of the Embargo Act of 1807, the federal government of the United States took little interest in imposing embargoes and economic sanctions against foreign countries until the 20th century. United States trade policy was entirely a ...

. Five EU nations declared in a joint statement on 29 November 2019 that they will join the INSTEX mechanism for trade with Iran. These countries are Belgium, Denmark, Netherlands, Finland and Sweden. European countries said on March 2023 they had decided to end INSTEX, through which only a single transaction had traded.

Ali Khamenei Sayyid Ali Hosseini Khamenei ( fa, سید علی حسینی خامنه‌ای, ; born 19 April 1939) is a Twelver Shia ''marja and the second and current Supreme Leader of Iran, in office since 1989. He was previously the third president o ...

, Leader of the Islamic Revolution, likened the European financial mechanism for trade with Iran to a “bitter joke".

HQ

The SPV is headquartered in

Paris Paris () is the capital and most populous city of France, with an estimated population of 2,165,423 residents in 2019 in an area of more than 105 km² (41 sq mi), making it the 30th most densely populated city in the world in 2020. S ...

and is headed by Per Fischer, who formerly served as Head of Financial Institutions at

Commerzbank Commerzbank AG () is a major German bank operating as a universal bank, headquartered in Frankfurt am Main. In the 2019 financial year, the bank was the second largest in Germany by the total value of its balance sheet. Founded in 1870 in Hambur ...

, between 2003 and 2014.

Purpose

As of May 2019, the use of the SPV is limited to humanitarian purposes; such as the purchase of foods or medicines. INSTEX had been made available to all

EU member states The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...

. On 11 February 2019, Russian deputy foreign minister

Sergei Ryabkov Sergei Alexeyevich Ryabkov (russian: Сергей Алексеевич Рябков) (born 8 July 1960) is a Russian politician, currently serving as the Deputy Foreign Minister of the Russian Federation since 2008. Early life and education Rya ...

stated that Russia would be interested in participating in INSTEX.

Operations

On 28 June 2019, France, Germany and the United Kingdom told a meeting of the

JCPOA The Joint Comprehensive Plan of Action (JCPOA; fa, برنامه جامع اقدام مشترک , barnāmeye jāme'e eqdāme moshtarak (, ''BARJAM'')), commonly known as the Iran nuclear deal or Iran deal, is an agreement on the Iranian nuclear ...

Joint Commission that INSTEX had been made operational and available to all EU member states.

Federica Mogherini Federica Mogherini (; born 16 June 1973) is an Italian politician who served as High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission from 2014 to 2019. She previously served as I ...

High Representative of the European Union for Foreign Affairs and Security Policy The High Representative of the Union for Foreign Affairs and Security Policy (HR/VP) is the chief co-ordinator and representative of the Common Foreign and Security Policy (CFSP) within the European Union (EU). The position is currently held b ...

stated that the purpose of INSTEX is to facilitate "legitimate trade" with Iran for any EU member and has been conceived to be open to non-EU countries. In Iran, INSTEX is mirrored by the STFI (Special Trade and Finance Instrument), a similar SPV. STFI matches incoming and outgoing transactions in the same way. In effect, two Iranian entities pay each other, thus, no money crosses the Iranian border. On 31 March 2020, over one year after the introduction of the platform, the first INSTEX transaction was concluded. It covered an import of medical equipment to combat the

COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was COVID-19 pandemic in Hubei, identified in Wuhan, China, in December ...

outbreak in Iran.

Geo-economic effects

As academic Tim Beal summarizes, INSTEX is among the responses to sanctions imposed by the United States viewed by commentators as contributing to dedollarization.

References

{{Authority Control Financial services companies established in 2019 Companies based in Paris International organizations based in France Presidency of Hassan Rouhani

HQ

Purpose

Operations

Geo-economic effects

See also

References