European Union foreign policy chief Federica Mogherini said on September 27 that a so-called Special Purpose Vehicle (SPV) under consideration to facilitate trade with Iran that would be shielded from US sanctions could be in place “before November”, Reuters reported.

The US was still the EU’s strongest ally, but “no sovereign country or organisation can accept that somebody else decides with whom you are allowed to do trade with”, she was quoted as saying.

European diplomats have said that the SPV might provide a means to create a barter system, similar to one used by the Soviet Union during the Cold War, to exchange Iranian oil for European goods without money changing hands. In that way, trade transactions would not come into contact with the US financial system via the global financial system, thus protecting parties from US Treasury sanctions.

However, sceptics worry that Washington could simply adjust its sanctions regime to target the traded merchandise rather than cash used to fund the trade. On the other hand, the use of the SPV would not be transparent—the identities of traders using it could be protected.

Some reports based on theories outlined by European think-tanks also state that the SPV might have bartering arrangements that would guarantee that no funds would traverse through Iranian hands. For example, Iran could ship crude oil to a German firm and the credit generated by that transaction could then be used to pay a French manufacturer for goods shipped the other way.

The US has called on countries around the world to back its sanctions-led attempt to strangle the Iranian economy to force Tehran to the table to renegotiate its role in Middle East affairs. But other major powers, including the UK, France, Germany, Russia and China are instead sticking with the Iran nuclear deal.

The US unilaterally walked out of that accord in early May. It relieves Iran, presently slipping back into recession, of heavy sanctions in return for Iranian compliance with measures designed to bar any path Tehran might take to build a nuclear bomb. US President Donald Trump says that is not enough.

November 5 is a key date as that is the deadline after which the US wants to see a total worldwide embargo on Iranian oil exports.

As reported by Bloomberg on September 27, Mogherini made further remarks on the envisaged SPV at Bloomberg Global Business Forum in New York, held to coincide with the gathering of world leaders for the UN General Assembly.

Challenge to the dollar
Mogherini has previously commented on how the US pulling out of the nuclear deal could spark a serious challenge to the US dollar as the world’s number one reserve currency because nations have started to consider what kind of financial autonomy they really have.

“The dollar is not the only currency on earth,” she said at the forum.

Asked about the sanctions the US has threatened to impose on any European companies that use the planned workaround (which would be made available to companies in many non-European countries as well), Mogherini said she wouldn’t “speculate on what happens” to the US-Europe relationship if the Trump administration followed through on its threat. But, Mogherini said, Europe could not “accept the extraterritorial effect of the sanctions”.