On 28 June, Britain, France and Germany (E3 countries) announced that The Instrument in Support of Trade Exchanges (INSTEX) was up and running.

Instex is a special-purpose vehicle (SPV) established by the E3 countries in January 2019 to facilitate international trade with Iran after the United States unilaterally withdrew from the 2015 nuclear agreement and re-imposed economic sanctions on Iran.

The mechanism is designed to salvage the agreement, also known as the Joint Comprehensive Plan of Action, by ensuring that Iran continues to abide by its commitments to curb its nuclear enrichment program.

The nuclear deal was reached under former President Barack Obama, with China, France, Russia, the United Kingdom, the United States, Germany, and the European Union as its signatories.

Based in Paris, France, the mechanism avoids use of U.S. dollars.

The mechanism allows European and Iranian companies to send and receive money within their borders, thus allowing the flow of commodities while avoiding overseas financial transactions that could be affected by US sanctions.

In April, Iran established the Special Trade and Finance Institute as the local parallel of the European Instex.

Ali Vaez, Director of the Iran Project at the International Crisis Group, told Middle East Eye:

“At this stage, the only way Europe can prevent further deterioration of the crisis with Iran, which was entirely manufactured by the Trump administration, is for INSTEX to become fully operational. And the easiest path to achieve this objective is for the E3 to inject billions of Euros worth of export credit into it and for more EU states to join in.”

“Investment by sovereign states into INSTEX could help alleviate Europe's private sector concerns and deter the U.S. from targeting the mechanism, which initially will focus on humanitarian trade that is exempt from US sanctions.”

“If Europe's investment in INSTEX comes to naught, Europe will have nearly zero leverage to de-escalate tensions between Tehran and Washington.”

Marco Carnelos, a former Italian diplomat and Middle East Eye columnist, said:

“It’s already too late for the EU to do anything to minimise the impact of US sanctions on Iranian economy.”

“The biggest stumbling block for Instex is the behaviour of the banks. So far, the majority of banks in the world are not ready to run any risk in continuing to facilitate business with Iran because they are afraid of the reaction of the U.S. treasury. No western or major bank is ready to be listed by the American treasury.”