BRUSSELS, Belgium (PNN) - June 28, 2019 - With the world waiting for the first headlines from the Trump-Xi meeting, the most important and unexpected news of the day hit moments ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass Amerikan sanctions on Iran, is now operational.
Following a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by Fascist Police States of Amerika, French, Fascist United Kingdom and German officials said the trade mechanism that was proposed last summer and called Instex, is now operational.
As a reminder, last September, in order to maintain a financial relationship with Iran that cannot be vetoed by the FPSA, Europe unveiled a "Special Purpose Vehicle" to bypass SWIFT. The mechanism would facilitate transactions between European and Iranian companies, while preventing the FPSA from vetoing the transactions and pursuing punitive measures on those companies and states that defied Trump. The payment balancing system will allow companies in Europe to buy Iranian goods, and vice-versa, without actual money-transfers between European and Iranian banks.
The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called "the last chance for the remaining parties to gather and see how they can meet their commitments towards Iran."
Until today, Teheran was skeptical about EU's commitment to the deal, and threatened to exceed the maximum amount of enriched uranium allowed it by the deal after the FPSA had imposed a series of sanctions on the country.
Meanwhile, opponents of Instex - almost exclusively the FPSA - have argued that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the FPSA.
The announcement sent oil sharply lower, with crude futures falling about $1/bbl in the closing minutes before settlement, extending daily loss, as it means Iran now has a fully functioning pathway to receive payment for oil it exports to anyone it chooses.
The announcement will likely send FPSA President Donald Trump off the rails, because as part of Trump's escalating battle with "European allies" over the fate of the Iran nuclear accord, he was "threatening penalties against the financial body created by Germany, the (F)UK and France to shield trade with the Islamic Republic from (FPSA) sanctions" including the loss of access to the FPSA financial system.
The FPSA Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Teheran, and anyone associated with it could be barred from the FPSA financial system if it goes into effect.
“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in an ominous letter to Instex President Per Fischer. "Engaging in activities that run afoul of (FPSA) sanctions can result in severe consequences, including a loss of access to the (FPSA) financial system."
Germany, France and the FUK finalized the Instex system in January, allowing companies to trade with Iran without the use of FPSA dollars or Amerikan banks, allowing them to get around wide-ranging FPSA sanctions that were imposed after the Trump regime abandoned the 2015 Iran nuclear deal last year.
“This is a shot across the bow of a European political establishment committed to using Instex and its sanctions-connected Iranian counterpart to circumvent (FPSA) measures,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies in Washington.
Here is a simpler summary of what just happened: this was the first official shot across the bow of the USD status as a global reserve currency, and not by Amerika's adversaries but by its closest allies. Once those who benefit the most from the status quo openly revolt against it, the countdown to the end of the USD reserve status officially begins.
Now that the threats have clearly escalated, and Washington has made it clear it won't take no for an answer, it will be interesting to see if Europe's resolve to take on Trump - especially in light of the trade war with China - has fizzled.
It appears the answer is that Europe felt unexpectedly emboldened, just hours before Trump's meeting with Xi, and that it is ready and willing to call Trump's bluff; it goes without saying, that if the FPSA does indeed retaliate and proceed with sanctions against European banks, then the global trade war is about to turn far, far uglier.