Analysis by PMOI/MEK
Feb. 9, 2019 – Last week, Europe announced its long-awaited measure to keep the JCPOA with Iran, Instrument for Supporting Trade Exchanges (INSTEX).
INSTEX, which is set up like a financial Special Purpose Vehicle, will play the role of a clearinghouse where companies can buy Iranian oil but instead of sending cash to the country, will give credit to INSTEX where Iran can buy goods and services. Isolating trades through this channel will help companies to avoid the much-feared U.S. sanctions.
At least that’s how it’s supposed to work.
But until now, INSTEX isn’t operational and there are a series of details that need to be hammered out that will take at least months. In addition, Iran can only buy non-sanctioned goods and services through Europe’s financial channel, including food, medicaments, medical equipment, etc. But these items were already exempt from U.S. sanctions under the broad umbrella of humanitarian goods.
And as if that was not enough, adding insult to injury, the implementation of INSTEX is conditioned to Iran’s acceptance of the FATF anti-money-laundering standards. It hasn’t been explicitly conditioned but there is a strong suggestion in the language used.
This whole package has led to a flurry of statements by rank-and-file Iranian officials. While the entire spectrum of the elite complains about the situation, people close to Iranian Supreme Leader Ali Khamenei’s faction are especially furious.
Iranian state-run television recently made some interviews with members of the Iranian parliament about INSTEX.
When asked about Iran’s position in the balance of power, Hamid-Reza Haji Babaee, a former Minister of Education in Mahmoud Ahmadinejad’s government and current member of parliament from Hamedan, said: “This is an insult to the Iranian people and condescending toward our country’s diplomacy. The country’s diplomacy has to respond… First of all, we shouldn’t approve the FATF [bills] because of Europe’s suggestion, and let’s suppose we approve them, who knows that Europe tells the truth and tomorrow doesn’t say that it was because of U.S. pressure that we couldn’t make a decision and now you need to throw your missiles into the sea so that we can make a decision?”
Heshmatollah Falahatpisheh, chairman of Iranian parliament’s national security and foreign relations commission, tries to downplay EU’s conditions and says: “They said that they expect this to happen with regard to accepting FATF mechanisms and no obstacles arise, but saying that they’ve put political conditions in place, no they haven’t, and they can’t put political conditions.”
That’s while the EU joint statement by the E3, including Germany, the UK, and France, announcing the creation of INSTEX, clearly reiterates the importance of international standards that are required by FATF.
“INSTEX will function under the highest international standards with regards to anti-money laundering, combating the financing of terrorism (AML/CFT) and EU and UN sanctions compliance. In this respect, the E3 expect Iran to swiftly implement all elements of its FATF action plan,” the joint statement reads.
Mojtaba Zonnour, an Iranian MP from the city of Qom and close to Khamenei’s faction, describes connecting INSTEX to FATF as meddling in the regime’s internal affairs and shows his fear of approving the FATF bills into law saying: “Whether it’s a condition or a suggestion, they are not allowed to meddle in our internal affairs because FATF is not an international treaty but rather a voluntary measure. It’s up to us to join FATF or not join it. Therefore, they can’t make conditions for us.”
The four FATF bills that the Iranian regime needs to approve are as follows:
- Combatting moneylaundering bill
- Combatting terrorismfinancing bill
- Joining the United Nations Convention against Transnational Organized Crime bill (Palermo bill)
- Joining the International Convention for the Suppression of the Financing of Terrorism bill
All the parliamentarians agree that INSTEX is condescending for the Iranian regime. Fact is that the European financial measure is nothing more than an oil for food mechanism.
But what makes it more demeaning to the ruling mullahs in Tehran is that the mechanism does not work unless the Iranian regime joins the FATF.
