Steps must be taken to avoid war between Tehran and Washington, Germany’s foreign minister warned, echoing broader concern in Europe over the fallout of the new standoff in the Middle East.

Following stops in Jordan and Iraq, German FM Heiko Maas met with his counterpart in Iran on Monday to discuss ways to breathe new life into the 2015 nuclear pact, hoping to avert further escalation with Washington amid a flurry of accusations and threats.

“The situation in the region here is highly explosive and extremely serious,” Maas told reporters after meeting with Iranian FM Javad Zarif. “A dangerous escalation of existing tensions can also lead to a military escalation.”

In that atmosphere of hostility, a number of large European firms have ceased dealings with the Islamic Republic in fear of American sanctions, isolating the country further from global markets.

A long-awaited trade vehicle designed to help Iran circumvent US sanctions will be ready soon, Maas said, which Germany hopes will restore some trade between Iran and Europe and help “avert a failure” of the nuclear deal.

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Maas warned the new payment system, known as INSTEX (Instrument in Support of Trade Exchanges), “cannot work miracles” and will be difficult to implement.

“This is an instrument of a new kind, so it's not straightforward to operationalise it,” Maas said, but added that “all the formal requirements are in place now.”

Although Iran has been highly critical of the United States for sidestepping the deal in May of 2018 – and has slammed the EU signatories for not doing more to pressure Washington – FM Zarif agreed at the meeting to cooperate with the stop-gap trade mechanism.

Washington continues to impose new layers of sanctions on the Islamic Republic as part of what it calls a “maximum pressure campaign,” most recently targeting the country’s petrochemical sector, while sanctions on its entire oil industry were introduced in November.

Iran has deemed the sanctions “economic terrorism,” and in May vowed to step up its rate of uranium enrichment if the penalties weren’t lifted.

The EU signatories to the nuclear deal, Germany, France and the UK, have all called on the United States to respect the agreement signed in 2015 and vowed to maintain their end of the deal, but Iran remains critical of what it sees as a hollow effort to keep the agreement afloat.

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