Russia considers joining EU payment system meant to save Iran nuclear deal

Alec Luhn
Vladimir Putin gives a press conference with Iranian President Hassan Rouhani and Turkish President Recep Tayyip Erodgan last year - AFP

Russia has said it may join a European Union payment system aimed at salvaging the Iran nuclear deal if it is expanded to include oil purchases. 

The system, called Instex, is designed to facilitate payments to Iran despite the US trade sanctions reimposed on the country after Donald Trump pulled out of the landmark agreement in 2018. 

With its economy reeling from the US blockage of crucial oil exports, Iran said this month it would begin enriching more uranium than allowed by the “joint comprehensive plan of action”.

Tensions with the United States and United Kingdom have risen following several attacks on tankers in the Gulf. Iran said on Thursday it had seized a foreign oil tanker that was “smuggling fuel”.

In a not-so-subtle reference to the United States, Vladimir Putin's spokesman on Thursday called Instex an “important initiative” to protect European companies from “illegal attempts by third countries to limit their activities”. He said Russia was watching to see how well it functioned.

“With consideration of the initial experience using this system when it is activated, we can't exclude our cooperation in this,” the spokesman said. 

Foreign minister Sergei Lavrov, however, complained on Wednesday that Instex was only covering deliveries of food, medicine and other humanitarian aid, “which aren't banned by the Americans anyway”.

To bolster Iran's economy and ensure the survival of the deal, Instex would need to facilitate oil exports as well, he said. 

“Payments of a few million dollars have been completed through this channel. That's nothing compared to the obligations that Iran's partners took on as part of the join comprehensive plan of action,” he said during a press conference with the foreign minister of Côte d'Ivoire. “These assume the unimpeded purchase of Iranian oil and the unimpeded transfer of payments for delivering this energy source.”

German Foreign Minister Heiko Maas and Russian Foreign Minister Sergey Lavrov talk ahead a German-Russian forum on Thursday Credit: Marius Becker/AFP

Another possibility for easing the situation around Iran emerged with reports this week that US senator Rand Paul, who is known for his opposition to US interventions abroad, had gotten Mr Trump's approval to sit down with Iran's foreign minister in an attempt to reduce tensions.

Backed by 10 EU states, Instex was launched in January but only went online last month. It offers Iran a credit line of several million euros, far less than the €20bn in annual trade the EU did with Iran before the US sanctions.

The EU has said it would welcome third countries to join Instex but is still deliberating over whether the system should include oil payments. 

Saving the nuclear deal will require the continued support of Moscow, a key ally of Tehran that has fought alongside it to keep Bashar al-Assad in power in Syria. Russia is building two nuclear power plants in Iran and has sold it arms like surface-to-air missiles. 

It is China, however, that may be able to do the most for Iran's economy by buying its crude oil in defiance of US sanctions.

Iranian Foreign Minister Javad Zarif attends a UN session on sustainable development on Wednesday Credit: Kena Betancur/AFP

Mr Lavrov's comments echoed those of Iranian officials who said Instex was a positive development but insufficient to keep the county solvent.  

The country's envoy to the United Nations called the system a “very lovely car but without any gasoline”.

Russia was continuing talks with Iran, Europe and China to “find not symbolic but real ways of giving Iran the economic benefits that are an inherent part of the deal,” Mr Lavrov said.