INSTEX Has No 'Corporate Demand' in EU, State Department Official Says
The U.S. is not expecting major companies to use INSTEX, the European payment system designed to allow countries to trade with Iran despite U.S. sanctions, said Brian Hook, a State Department senior policy adviser. Hook also said INSTEX will likely never be fully operational.
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Hook said Iran is not a “significant market” for the European Union. “There is no corporate demand for INSTEX,” Hook said, speaking during an Aug. 20 press conference. “If you are a European company and you are given the choice between doing business in the American market or the Iranian market, it is the fastest decision you will ever make as CEO.”
Hook also said he doesn't believe INSTEX will ever fully operate because of Iran’s inability to set up a banking system with “high transparency standards” that are necessary to complete the transactions. In order to trade with INSTEX, Iran needs to set up a mirror payment system that meets standards of the intergovernmental Financial Action Task Force, Hook said, which was created to combat money laundering. “I’m still not certain that we will ever see INSTEX be operational, because Iran has no intention of operating a transparent financial system, because, if it did, it would not be able to disguise terror finance and money laundering that it does on a daily basis,” Hook said.
Hook also said the threat of U.S. sanctions are enough of a deterrent to stop any companies from using INSTEX. The U.S. has warned Europe that anyone associated with INSTEX could face sanctions (see 1905300035). “Everyone understands that the United States will sanction any sanctionable activity,” Hook said. “Our expectation is that INSTEX will be used for only licit purposes and will not be used to evade American sanctions.”
Hook also said Gibraltar’s decision to release Grace 1 -- the Iranian tanker suspected of shipping oil to Syria -- was “unfortunate.” Before releasing the ship, British authorities said Iran promised it would not sail to Syria in violation of United Nations and U.S. sanctions (see 1908160034). But Hook said the U.S. did not believe Iran’s promise. The U.S. asked Gibraltar to continue detaining the ship but was unsuccessful (see 1908190036).
“We have already seen a spokesman for the Iranian Government say they have not committed that the oil will not end up in Syria,” Hook said. “And so we are using that information to explain to governments that there are no assurances from this regime that it will not send the oil to Syria, and we also cannot trust the assurances of the Iranian regime.”