US policies drive Iran's trade partner Europe to ditch dollar to maintain economic ties

European countries have already issued euro-denominated loans in order to finance exports to Iran. For instance, France started offering euro-denominated loans to Iranian buyers of its goods later this year, to help trade flourish outside the reach of U.S. sanctions, state-owned investment bank Bpifrance announced at the beginning of this year.

Italy and Iran agreed on a framework credit agreement to fund investments in Iran worth up to 5 billion euros. Iran's government-owned Bank of Industry and Mine and Middle East Bank signed the accord and the investment arm of Italian state-owned holding Invitalia. Moreover, Austria's Oberbank and Denmark's Danske Bank inked framework agreements with a number of Iranian banks in September 2017, under which they will provide financing for Austrian and Danish companies exporting to Iran.

All European parties try to structure a financing model through vehicles without any U.S. link, whether to the currency or otherwise, the aim is to avoid the extraterritorial reach of U.S. legislation.

Moreover, recent reports also claimed Tehran has taken preliminary steps to establish a bank for transactions between Iran and the EU in euros. This was done to settle possible financial issues which might arise after Washington's decision to withdraw from the deal, Iranian Ambassador to Germany Ali Majedi was quoted saying.

The second proposal is looking at Europe's financial independence – what can be done to give Europe more financial tools allowing it to be independent of the U.S.? One proposal is to set up a purely European finance house to oversee euro-denominated transactions with Iran. The French minister also proposed a European agency capable of following the activities of foreign companies. With regard to the use of blocking statue, which has vague rules difficult to enforce, European Commission Vice President Valdis Dombrovskis told the European Parliament yesterday that "the EU blocking regulation could be of limited effectiveness there, given the international nature of banking system and especially the exposure of large systemic banks to U.S. financial system and U.S. dollar transactions."

https://www.dailysabah.com/economy/2018/05/18/us-policies-drive-irans-trade-partner-europe-to-ditch-dollar-to-maintain-economic-ties