France, Germany and Britain have set up a European mechanism for non-dollar trade with Iran to avert United States sanctions, although diplomats acknowledged it is unlikely to yield big commercial transactions Tehran says it needs to keep a nuclear deal afloat.
The "special objective vehicle", or SPV, is part of joint European Union efforts to keep worldwide trade with Iran alive after U.S. President Donald Trump pulled out of a previous Obama-era trade agreement last May, slamming it as a "horrible, one-sided deal".
Abbas Araghchi, Iran's deputy foreign minister, told Iranian state television on Thursday that he expected the payment channel to be ready for business in one or two months.
The EU is backing INSTEX, which stands for the Instrument In Support of Trade Exchanges, but it is not directly involved, officials said.
Upon his arrival to the EU meeting in Romania, Belgian Foreign Minister Didier Reynders tried to soften this blow to American-European relations by stating that Europe is still taking seriously several areas of mutual concern regarding Iran and that no-one is forcing any business to trade with anyone.
British Foreign Secretary Jeremy Hunt said they were working closely with Tehran to finalise the arrangements.
The SPV would set up a barter system that would allow Europe and Iran to trade goods and forgo the use of currency.
He said more work needed to be done to get the system up and running: "That includes work with Iran to establish the necessary counterpart structures".
Washington's major European allies opposed last year's decision by President Donald Trump to abandon the 2015 deal.More news: US, Taliban Draft Framework For Peace Talks With Afghanistan
The US move exacerbated an already deep economic crisis in Iran and deterred many European firms from continuing to trade with Iran lest they fall foul of increasingly restrictive US Treasury sanctions.
USA officials said they were following the situation but dismissed the idea that the new entity would have any impact on efforts to exert economic pressure on Tehran. The Iran nuclear deal remains central to worldwide efforts to halt nuclear proliferation and is crucial for the security of the region.
A number of major worldwide companies have already pulled out of Iran in the face of dire warnings that the U.S. will vigorously pursue any company breaching the sanctions regime.
The spokesperson added, "We do not expect the SPV will in any way impact our maximum economic pressure campaign".
The head of the country's Atomic Energy Organisation, Ali Akbar Salehi, has also repeatedly warned over the past few months that Iran's "period of patience is getting more and more limited".
O'Toole said, for the immediate future, the new European financial vehicle should be enough to ensure that Iran continues complying with the terms of the Barack Obama-era nuclear deal, which capped Tehran's ability to enrich uranium and kept it from producing a nuclear weapon.
"This is an important step and a political signal by E3, who feel duty bound to uphold the Iran nuclear deal as long as Iran fulfills all its obligations as set out in the treaty", German officials told German worldwide broadcaster DW. The EU this month imposed its first sanctions on Iran since the nuclear pact, in response to the ballistic missile tests and assassination plots on European soil.
The idea is for the SPV to help preserve the economic benefits for Iran derived from the curbs it placed on its nuclear programme under a 2015 deal with world powers.
The three big European powers are also assessing whether to push for new sanctions on Iran over its missile programme, diplomats have told Reuters.