Print Friendly, PDF & Email

INSTEX – Instrument In Support Of Trade Exchanges

Topics Covered:
Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.


INSTEX – Instrument In Support Of Trade Exchanges

  • What to study?
  • For Prelims: What is INSTEX? Stakeholders involved.
  • For Mains: Why is it being setup? Benefits for participants, implications on other countries? How would US react to this?

Context: Six Countries – Belgium, Denmark, Finland, the Netherlands, Norway and Sweden have recently joined INSTEX.

What is it?

It is a payment mechanism being setup by the European Union to secure trade with Iran and skirt US sanctions after Washington pulled out of the landmark nuclear deal last May.

It 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.

It is a project of the governments of France, Germany and Britain and will receive the formal endorsement of all 28 EU members.


Key features of INSTEX:

  • It will allow trade between the EU and Iranwithout relying on direct financial transactions.
  • It will initially be used for non-sanctionable trade, including humanitarian goods such as medicine, food and medical devices.



  • This mechanism is the first concrete step by the EU to counter Trump’s unilateral decision to withdraw from the nuclear deal.
  • The launching of INSTEX is not only a matter of Iran-EU relations but also embodies a new approach by the bloc towards US policies. It “becomes an opportunity when it’s understood as an experiment and as part of a bigger project to strengthen EU economic power.


How has the US reacted?

It has warned EU that any attempt to evade its “maximum pressure” campaign on Iran would be subject to stiff penalties.

Sources: toi.