January 10, 2020
Six European countries have announced that they are joining the financial mechanism set up to process trade with Iran—but that doesn’t mean that trade with the Islamic Republic is about to take off.
On November 30, France, Britain and Germany jointly announced that the governments of Belgium, Denmark, Finland, the Netherlands, Norway and Sweden have joined the mechanism “as shareholders.”
Many in the United States grumbled about that as if it poked a major hole in US sanctions. And some in Iran swelled with expectations of trade taking off.
But the reality is that it doesn’t matter what governments join the financial mechanism, called Instrument in Support of Trade Exchanges (Instex). What matters is whether business firms in those countries choose to use it. But business firms in Britain, France and Germany have just ignored Instex in the many months since it was first set up.
Only a solitary transaction is so far known to have been conducted through Instex.
Firms that do business with the United States are generally averse to any trade with Iran for fear of being shut out of the much larger US market.
