European payment system nearly operational in key development to salvage Iran nuclear pact with world powers.

A European payment system designed to circumvent US sanctions on Iran will be ready soon, Germany announced on Monday.

German Foreign Minister Heiko Maas met Iranian President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif in Tehran as part of European efforts to salvage the historic JCPOA nuclear pact and defuse rising US-Iranian tension.

Iran and Germany held “frank and serious” talks on saving the 2015 deal with world powers, Zarif told a joint press conference.

“Tehran will cooperate with EU signatories of the deal to save it,” Zarif said.

Maas said earlier the payment system, known as INSTEX, (Instrument in Support of Trade Exchanges) will soon be ready to go after months of work.

“This is an instrument of a new kind so it’s not straightforward to operationalise it,” he said, pointing to the complexity of trying to install a totally new payment system.

“But all the formal requirements are in place now, and so I’m assuming we’ll be ready to use it in the foreseeable future,” added Mass about the system for barter-based trade with Iran.

190609165320364

A cautious thaw in relations between Tehran and Washington began in 2015 when the deal was struck between six world powers and Iran, limiting its nuclear activity.

But tensions with the US have mounted since President Donald Trump withdrew Washington from the accord in 2018 and reimposed sweeping sanctions.

Iran has criticised the European signatories of the JCPOA for failing to salvage the pact after Trump pulled the US out.

“There is a serious situation in the region. An escalation of tension is becoming uncontrollable and military action wouldn’t be in line with the interests of any party,” Maas said.

“Germany, France, and Britain call for supporting the deal and we are fulfilling our commitments. We are doing our utmost to prevent the failure of the deal.”

Foreign ministry spokesman Abbas Mousavi said on Monday that Iran would consider negotiating with the US if it halts “economic terrorism” against the Iranian people.

“We will think about the rhetoric and words when they are accompanied with actions and change of attitude. The best example would be a decrease in pain and suffering of the Iranian people caused by the illegal and targeted pressure by the US government against the Iranian nation,” Mousavi said.

The UN atomic watchdog’s chief Yukiya Amano, meanwhile, expressed concern about rising tensions over Iran’s nuclear programme, calling on Monday for dialogue to ease them.

Danger of conflict

In an effort to protect at least some of Iran’s economy and keep alive the nuclear deal that Washington is about to quit, France, Britain and Germany set up INSTEX as a special-purpose vehicle for facilitating non-dollar trade with Iran.

The three European Union members maintain the nuclear pact remains the best way to limit Iran’s enrichment of uranium, a potential pathway to the development of nuclear weapons, and have been trying to get Iran to keep to its commitments under the deal.

On a weekend stopover in Iraq en route to Tehran, Maas warned of the dangers that conflict with Iran posed for the entire Middle East, saying the Europeans were convinced it was worth trying to keep the nuclear pact with Iran.

Last month, Iran scaled back some commitments under the 2015 deal and warned in 60 days it would resume refining uranium to a higher fissile degree than that permitted by the accord if Europe failed to shield its trade from US sanctions.

Iran critical

190608145137897

Iran has always maintained its nuclear activity is peaceful and refuses to put its missile and military capabilities on the negotiating table, something the Trump administration has demanded.

Maas coordinated his trip with France and Britain, and also discussed it with US Secretary of State Mike Pompeo.

In addition to the German visit, Japan‘s Prime Minister Shinzo Abe arrives on Wednesday in Iran on a rare diplomatic mission, hoping to ease the tensions between Tehran and Washington.

Japan wants to lower the temperature, officials say, with Abe winning Trump’s blessing for the mediation trip when the US leader visited Tokyo last month.

However, the visit by Japan’s leader “faces substantial obstacles and is unlikely to bear fruit”, Tobias Harris, an analyst at Teneo consultancy group, told AFP news agency.