Europe sells medicine to Tehran in first bypass of US sanctions, as Iran grapples with coronavirus outbreak

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The UK, Germany and France announced the first sale of goods to Iran using a bartering mechanism called Instex established to bypass harsh United States sanctions on the country, which is battling a major outbreak of the Covid-19 pandemic.

The transaction involves the sale of €500,000 (£442,000) of medicine by a private company in Germany to a firm in Iran, sources with knowledge of the deal told The Independent. The products are unrelated to coronavirus, said a diplomatic source.

“That’s not to say that the mechanism couldn’t be used to help with the pandemic effort in Iran,” they said.

Though unrelated, the sale could help alleviate pressure on a public health system reeling under the impact of an outbreak, which has officially killed nearly 2,900 people in Iran, infected at least 44,000 and at its peak was causing a fatality every 10 minutes.

The deal also bolsters prospects for the survival of Joint Comprehensive Plan of Action (JCPOA), the 2015 nuclear deal established by Iran and world powers to curtail Iran’s atomic technology ambitions. But it potentially heightens tensions with the US over Iran.

The German foreign ministry announced on Tuesday that Instex had “successfully concluded its first transaction”, facilitating the export of “medical goods” from Europe to Iran.

“These goods are now in Iran,” said a press release by the UK Foreign Office.

The name of the companies involved remains “confidential”, said the diplomatic source.

Instex, which includes nine European nations as shareholders, was set up as a way to circumvent draconian sanctions on Iran imposed by the United States after the administration of Donald Trump withdrew from the JCPOA.

The deal gave Iran relief from international financial restrictions in exchange for limits on its nuclear programme. It is meant to conduct non-cash bartering transactions with its Iranian counterpart, called the Special Trade and Finance Institute (STFI).

“Now that Instex has passed the hurdle of its first transaction we’re hoping the second transaction will happen soon,” said the diplomatic source.

As US trade restrictions damaged Iran’s economy, Tehran began ramping up its nuclear programme, though it has yet to end its cooperation with international inspectors watching over sensitive facilities.

Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations, said the transaction was an “important step” in preserving the nuclear deal and helping Iran fight coronavirus. “Although Instex has taken longer than expected, this first transaction comes at a critical time, providing hope that humanitarian trade with Iran can increase during its battle against Covid-19 battle, with potential to save lives of ordinary Iranians,” she said.

Washington pressure groups and hardline elements in the White House and the US State Department have eyed Instex suspiciously, vowing to crush it if it is used to help alleviate Tehran’s financial troubles.

“If reports [are] true of [the] first Instex transaction tomorrow, [the US] Treasury [Department] should sanction STFI, the Iran counterpart to Instex, which is controlled by sanctioned Central Bank of Iran,” Mark Dubowitz, a leading operative of the Foundation for the Defence of Democracy, an influential Washington organisation, wrote late last year.

Washington has also set up a channel through Switzerland to dispatch humanitarian goods to Iran, but so far leaders of the Islamic Republic have rejected any offers of help from the US, accusing it of potentially dispatching spies or exacerbating the illness under the guise of providing help.

On Tuesday, an Iranian university “donated” dozens of domestically produced coronavirus testing kits to the US, which is also suffering through one of the world’s worst outbreaks of the pandemic, using the Swiss embassy in Tehran as an intermediary.

“Our enemy is America’s government, not its people,” Hadi Zahiri, spokesman for Baqiyatallah Medical Sciences University, was quoted as saying by local news outlets.