Europe and Iran plot oil-for-goods scheme to bypass US sanctions

Diplomats are examining a scheme to barter Iranian oil for European goods through Russia as part of mechanism to bypass American sanctions on the Islamic Republic, The Independent can reveal.

The proposal is one idea under consideration by diplomats: Iran would sell its oil to Russia, which would then refine it and sell it to Europe. Companies in Europe could then transfer goods and services to Iran while circumventing any US restrictions on trade with Iran.

For now, the banking mechanism – announced by Europe, China, and Russia along the sidelines of the United Nations General Assembly this week – remains a work in progress, a symbolic show of support for Iran and a slap at the Trump administration during a week it intended to showcase its anti-Iran agenda.

But experts say it could evolve in the medium term, becoming an alternative mechanism for trade with Iran despite US restrictions set to tighten in November, and thereby salvage the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal forged by Iran and world powers in 2015. The discussions about the mechanism are sign of shifting diplomatic winds.

“What is certain now is that thanks to Donald Trump’s policy, Europe is working closer now with China and Russia,” a western diplomat told The Independent.

The United Nations Security Council on Wednesday became the latest venue for the showdown between Iran’s backers and the Trump administration. Washington is attempting to pressure Tehran into buckling to its demands to curtail its missile program, mothball its entire nuclear infrastructure, and rein in militias it has trained, armed, or deployed throughout the region.

“I ask all members of the Security Council to work with the US to ensure the Iranian regime changes its behaviour and never acquires a nuclear bomb,” said Mr Trump, warning of “severe consequences” for any nation that sought to circumvent draconian US financial sanctions to be imposed on Iran starting on 4 November.

Mr Trump withdrew the US from the JCPOA in May, saying he wanted a better deal that includes Iran’s other activities, but he has also shown contempt for the ways of the UN and the norms of international diplomacy.

“The whole point of the JCPOA was that it wasn’t a bilateral deal,” said Sanam Naraghi-Anderlini, a UN adviser and specialist on Iran. “It was rooted in a Security Council resolution. The process of sanctions and the removal of sanctions was rooted in the Security Council.”

Analysts and diplomats said Wednesday’s Security Council meeting highlighted US isolation after its withdrawal from the deal and what one intermediary called its “demonisation” of Iran.

“One member after the other came out in support of the nuclear deal, and even those that expressed concern about Iran, their message was clear: although Iran is part of the problem in the region they have to be part of the solution,” said Ali Vaez, Iran researcher at the Crisis Group. “The Trump administration’s maximalism has isolated it.”

Many world leaders are also put off by the Trump team’s tone, which some consider bullying and insulting, and its perceived pandering to conservative US pressure groups linked to wealthy anti-Iran donors. At a conference held by a shadowy anti-Iran thinktank on Tuesday, Mr Trump’s national security advisor John Bolton spoke in fiery terms, warning of “hell to pay” if Iran “crossed” the US.

During a press conference on Wednesday, Mr Rouhani downplayed this bellicose rhetoric. “In this American administration, unfortunately, the language has been said to be somewhat unique,” he said. “They speak with a different style, presumably because they are new to politics.”

“There are no sanctions that the US could impose in the future as they have imposed all kinds of sanctions on us before,” he said. “There is nothing new left to be imposed in November.”

Mr Vaez described a heating up of rhetoric by the US without a clear strategy. During the Security Council meeting, for example, he said Trump also berated China, accusing it of interfering in US elections. China is the biggest customer of Iranian oil and has the economic heft to ignore any US sanctions.

“China can make or break US sanctions against Iran or North Korea,” Mr Vaez said. “It has tremendous leverage on those countries and continues to ignore unilateral sanctions to provide Iran with an important lifeline.

Iran’s president, Hassan Rouhani, was not invited to attend the Security Council meeting. He rejected a claim that Mr Trump had declined to meet with him, noting that he had shunned the US president’s requests for a meeting during last year’s General Assembly gathering. During a press conference on Tuesday, Mr Rouhani dismissed the threat of heightened sanctions as “propaganda” by the US.

At the press conference, Mr Rouhani thanked the Security Council – apart from the US – for vocally backing the JCPOA and said his country did not seek confrontation. “They once again supported the JCPOA and Iran and in so doing it supported all those who believe in the rule of law,” he told reporters. “We do not wish to go to war with American forces in the region.”