The EU has completed its first ever INSTEX transaction with Iran. The Instrument in Support of Trade Exchanges is a special purpose vehicle set up by the EU in January 2019 in response to the earlier decision by the US to reimpose heavy sanctions on Iran.
Designed to provide a non-US dollar, non-SWIFT payment system between EU companies and Iranian counterparts, insurers and brokers will no doubt welcome this facilitation of trade -- particularly those in the marine and energy sectors, where opportunities in the region have thus far been thwarted by the US Treasury's rules.
The UK government said this week that INSTEX will hopefully provide a "sustainable, long-term solution for legitimate trade" between Europe and Iran. "Now the first transaction is complete, INSTEX and its Iranian counterpart STFI will work on more transactions and enhancing the mechanism,” it added.
Andy Stevenson, sanctions specialist at law firm Elborne Mitchell LLP welcomed the news. “It’s early days but this is potentially great news for the London Market. I’ve been approached many times in recent years by insurers and brokers wanting to do business in Iran and my answer is always that the business isn’t itself sanctioned, but making payments is nigh-on impossible. If the system expands as the EU seems to want it to, it’ll open up a whole new market to UK insurers.”
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