The creation of a special purpose vehicle that would allow the European Union (EU) to continue buying Iranian oil after the U.S. sanctions on Tehran return is politically risky and complicated, progressing very slowly, and will not be operational on November 5, the day on which American sanctions on Iran's oil snap back, EU diplomats told AFP on Thursday.
"The undertaking is very complicated... the vehicle will not be operational on November 5," one senior EU official told AFP.
The EU said in September that the foreign ministers of China, France, Germany, Russia, and the UK-the countries still in the Iran nuclear deal-met with Iran's foreign minister and decided to create a special purpose vehicle for dealings with Iran.
The bloc is struggling with the set-up of such a vehicle because no EU member is willing to host it for fear of angering the United States, the Financial Times reported on Sunday, citing EU diplomats.
The idea behind the special purpose vehicle (SPV) is to have it act as a clearing house into which buyers of Iranian oil would pay, allowing the EU to trade oil with Iran without having to directly pay the Islamic Republic.
However, the creation of the vehicle looks complicated, also due to the political risk of angering the U.S. Administration, which has criticized such an undertaking.
"We need to supply it with capital and clarify its governance -- this is not easy and it will not just start working overnight," an EU diplomat told AFP on Thursday. Another one noted that the EU wanted to avoid a "direct confrontation" with the U.S. Administration before the November 6 midterm elections.
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Officials insisted to AFP that the SPV plan is "not dead," but it's complicated and politically sensitive.
The United States will be "aggressive and unwavering" in enforcing the sanctions on Iran and won't let those sanctions be evaded by the European Union or anyone else, U.S. national security advisor John Bolton said in September after the EU announced it would be working to create the SPV.
U.S. Secretary of State Mike Pompeo also criticized the EU's plan for continuing transactions with Iran, describing it as "one of the most counterproductive measures imaginable for regional global peace and security."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More