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EU, Iran agree to create 'special vehicle' to maintain trade

To keep nuclear deal intact, EU establishes legal mechanism to keep trade with Iran, including in oil
Iran has said it will not accept any attempts to halt country’s oil exports (Reuters)

The remaining parties to the Iran nuclear deal said on Monday that they agreed to continue work to create a special mechanism to maintain trade with Iran, including in oil, following the US withdrawal from the 2015 pact.

The European Union and Iran, along with Russia and China, said they were determined to "protect the freedom of their economic operators to pursue legitimate business with Iran" in a statement issued after high-level talks at the United Nations.

"Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a special purpose vehicle to facilitate payments related to Iran's exports, including oil," European Union foreign policy chief Federica Mogherini told reporters after a meeting of senior officials from Britain, China, France, Germany, Russia and Iran.

The European Union until now had faced difficulties devising a workable legal framework to shield its companies from US sanctions that go into effect in November.

Highlighting just how difficult it will be for the Europeans to come up with concrete solutions, French state-owned bank Bpifrance on Monday abandoned its plan to set up a financial mechanism to aid French companies trading with Iran.

The crux of the deal, negotiated over almost two years by the administration of former US President Barack Obama, was that Iran would restrain its nuclear programme in return for the relaxation of sanctions that had crippled its economy.

Trump considered it flawed because it did not include curbs on Iran's ballistic missiles programme or its support for proxies in Syria, Yemen, Lebanon and Iraq.

The United States began reimposing economic sanctions this summer and the most draconian measures, which seek to force Iran's major customers to stop buying its oil, resume on 5 November.

Their impending return has contributed to a slide in Iran's currency. The rial has lost about two-thirds of its value this year, hitting a record low against the US dollar this month.

There are limits to what the EU can do to counter the oil sanctions, under which Washington can cut off from the US financial system any bank that facilitates an oil transaction with Iran.