Europe Accelerates Work on Special Purpose Vehicle to Counter U.S.’s Iran Sanctions

(Bloomberg) -- The European Union said work “has accelerated” on a so-called special purpose vehicle to help avoid the U.S. administration's reimposed sanctions on Iran as the bloc tries to preserve the landmark Iranian nuclear accord after the Trump administration abandoned it.

The EU also warned that the decision by Swift, the financial messaging network, to suspend some Iranian banks from its network in the face of the U.S.'s moves held “risks” for the global financial system. Swift on Monday said “certain Iranian banks” are being suspended from its network, days after the U.S. said the messaging network could be hit by the sanctions.

“The work on setting up the SPV, or special purpose vehicle, is continuing and it has actually accelerated,” Maja Kocijancic, EU spokeswoman for foreign affairs, told reporters in Brussels on Wednesday without elaborating. The bloc is seeking to use the SPV to help maintain the economic benefits promised in the 2015 nuclear deal flowing to Iran, but the details remain vague.

Read more: U.S. Lambasts Europe's ‘Paper Tiger' Response to Iran Sanctions

The U.S. this week renewed and ramped up sanctions on Iran's energy industry and banking sector, after pulling out of the Iranian agreement. The list of targets includes 50 Iranian banks, as well as shipping vessels and aircraft, according to the U.S. Treasury Department.

“We regret this decision of the U.S. to take unilateral sanctions,” European Commission Vice President Valdis Dombrovskis said on Monday in an interview with Bloomberg Television in Brussels. “Iran is actually sticking to its side of the deal, so the international community should stick with it.”

Swift didn't name the Iranian financial institutions that were suspended from its network, saying the “regrettable” step was taken “in the interest of the stability and integrity of the wider global financial system,” according to an emailed statement.

The Brussels-based commission, the EU executive, warned that the development “risks affecting the integrity of the international financial system,” according to Kocijancic.

--With assistance from Maria Tadeo.

To contact the reporter on this story: Jones Hayden in Brussels at jhayden1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jones Hayden

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