SPV to enable trade with Iran

Germany, France and Britain have launched an EU-backed “special purpose vehicle” (SPV) to insulate trade with Iran from U.S. sanctions on Tehran. Called INSTEX, the SPV is a mirror image transaction system 

1 European importer:vBuys oil from Iranian exporter and provides INSTEX with relevant documentation

2 European exporter: INSTEX matches sale with exporter selling machinery to Iran

3 Payment: INSTEX approves payment from European oil importer to European machinery exporter

4 Payment completed: INSTEX tops up funds to pay exporter if needed

5 Transaction completed: Iranian counterpart to INSTEX coordinates similar payment from Iranian importer of machinery to Iranian oil exporter

6 Sanctions averted: Payments between Europe and Iran are replaced with payments that do not cross Iran’s borders

INSTEX Instrument in Support of Trade Exchanges: Based in Paris. Shareholders are governments of Germany, France and Britain. Governments provide working capital, INSTEX charges commission fee for use of its services
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Sources: European Council on Foreign Relations, Financial Times
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