INSTEX Current Affairs - 2020
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International Atomic Energy Agency (IAEA), the United Nations’ atomic watchdog has confirmed that Iran has exceeded limit on amount of enriched uranium in its stockpile set out in 2015 nuclear deal with world powers.
This marks the 1st major departure by Iran from unraveling agreement a year after U.S. unilaterally withdrew from Joint Comprehensive Plan of Action (JCPOA) accord.
The initial announcement about Iran had broken limit set on its stockpile of low-enriched uranium by 2015 nuclear deal were made by Iranian Foreign Minister Mohammad Javad Zarif.
Limit Breached: Later IAEA inspectors verified and confirmed that the country has exceeded 300-kilogramme limit on its enriched uranium reserves.
Threat: Iran has threatened that country is planning to increase its enrichment of uranium closer to weapons-grade levels by July 7 and to suspend its other commitments under JCPOA deal in 10 days unless European powers took steps to implement their new mechanism called INSTEX for facilitating trade.
Iran also announced that it is planning to suspend other commitments also.
What is INSTEX?
INSTEX stands for Instrument in Support of Trade Exchanges.
It is a special-purpose vehicle established in January 2019 by E3 i.e. France, Germany and United Kingdom to facilitate non-dollar trade with Iran amid US unilateral withdrawal from JCPOA.
This new trading system is designed to circumvent sanctions on Iran. As of May 2019 use of SPV is limited to humanitarian purposes such as purchase of otherwise embargoed foods or medicines.
Issue: On 28 June 2019, EU stated that INSTEX has been made operational and that 1st transactions are being processed, but according to Iran, it did not meet countries needs.
About Iran Nuclear Deal
Joint Comprehensive Plan of Action (JCPOA) also known Iran nuclear deal or Iran deal was an agreement on Iranian nuclear program reached.
Participants: It was signed between Iran, P5+1 (refers to UN Security Council’s 5 permanent members (P5); namely France, United Kingdom, China, Russia, and US; plus Germany.), and European Union in Vienna on July 14, 2015.
Under the 2015 Nuclear Deal, Iran had agreed to limit its sensitive nuclear activities and allow in IAEA inspectors in return for lifting of sanctions.
Limit: As per the deal Iran can stockpile no more than 300kg of low-enriched uranium. Iran is permitted to produce low-enriched uranium, which has a 3.67% concentration of U-235, and can fuel a power plant only until 2031.
Uses: Enriched uranium used for peaceful purposes, including medical research and producing electricity but, if it is highly purified it can also be used to make a nuclear bomb.
Tags: 2015 Nuclear Deal • European Union • INSTEX • International Atomic Energy Agency • Iran Nuclear Deal'
INSTEX acronym of Instrument in Support of Trade Exchanges is a project of the three governments of UK, France and Germany to bypass US sanctions on Iran.
INSTEX is a special payment system which will help to save the Iran nuclear deal by allowing Tehran to keep trading with EU companies despite Washington re-imposing sanctions.
INSTEX is registered at Paris with an initial 3,000 Euros in the capital and a supervisory board with members from France and Germany and chaired by the UK. INSTEX will support legitimate European trade with Iran, focusing initially on the sectors most essential to the Iranian population such as pharmaceutical, medical devices and agri-food goods. INSTEX is primarily aimed at small and medium-sized companies.
In future, INSTEX will also be opened to third countries wanting to trade with Iran. INSTEX to be operational requires Iran to set up a parallel structure of its own.
Protecting against US Sanctions
INSTEX would receive payments from companies that want to trade with Iran, either by receiving waivers for oil imports or permissible trade in goods like food and medicine. As a result, there would be no direct transfer of funds between Iran and European companies. This would theoretically insulate firms from U.S. penalties.