Al-Monitor | Bijan Khajehpour: On the sidelines of the UN General Assembly in New York, European Union foreign policy chief Federica Mogherini announced that the European bloc would create a "special purpose vehicle" (SPV) to sustain Iran-EU trade despite the reimposition of US secondary sanctions. While details are being worked out, the SPV will act as a new payment mechanism between the two sides and will probably mainly rely on a bartering system with a minimum flow of funds. According to Mogherini, the SPV will aim to "assist and reassure economic operators pursuing legitimate business with Iran."

But what is the feasibility of this plan, and what does it mean for Iranian and European companies?

Of note, there will potentially be a number of SPVs that will be designated for business with Iran. Nonetheless, for the sake of simplicity, this analysis will refer solely to one SPV to outline the feasibility of this approach. The multiplicity of SPVs will also make the application of sanctions more challenging, which would serve the ultimate purpose of this structure.

As was argued in Al-Monitor in May, it was clear from the outset that the continuation of the Joint Comprehensive Plan of Action (JCPOA) absent the United States would depend on the cooperation of European small- and medium-sized enterprises (SMEs) with Iran. So the question is whether the proposed SPV can facilitate that process and protect European banks and companies from the risk of future US sanctions, considering that Washington could expand its measures to target the SPV mechanism and thus undermine the venture's future operations.

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