Smaller Italian companies still doing business with Iran: Envoy

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Rome, July 5 (IANS/AKI) Italy’s large companies ditched Iran “immediately” after the US reimposed sanctions last year, while small-to-medium-sized firms still want to do business with the Islamic Republic, its Ambassador Hamid Bayat said on Friday.

“Big Italian companies immediately abandoned Iran but small-to-medium-sized ones, which have always worked well with our country, want to keep doing so,” he told reporters and Italian analysts at a meeting here.

“But they need instruments to be able to operate in the Iranian market, above all banking ones,” Bayat underlined.

He said Iran had “repeatedly proposed” to Italy’s authorities – at the request of Italian business people – to use small local banks which are better able to guarantee credit lines enabling Italian companies to work with Iran.

The Ambassador also said that Iran hopes Italy will join a financial mechanism aimed at bypassing US sanctions and maintaining limited trade.

“Instex is an important tool that should enable Europe to keep the promises it made to Iran, such as allowing it to sell oil and to receive the revenues (from oil sales),” Bayat said.

Instex (Instrument in Support of Trade Exchanges) became operational on June 28, France, Germany and the United Kingdom – three signatories to the landmark 2015 nuclear deal with Iran – confirmed on Monday.

The mechanism, involving a barter system, is designed to allow European and Iranian companies to trade without any direct financial flows, thus bypassing the dollar and the US financial system.

Instex’s designers say it was meant for trade in basic goods, like food, medicine and humanitarian aid but Iran wants to use the instrument to sell oil – the country’s main source of foreign revenue.

“Iran needs to sell oil in order to purchase essential goods,” Bayat said.

The Ambassador also said that his country’s current tensions with the US are impacting its ties with Italy.

“It cannot be denied that Iran-Italy relations are feeling the effect of tensions between Tehran and Washington.

“But the two countries have the tools to overcome these problems,” the envoy said.

There is “every chance” that Italy can return to being Iran’s primary trading partner among European Union countries with annual bilateral trade topping more than five billion euros as it did before 2018, he said.

“Iran’s determination to boost its relations with Italy is really strong,” said Bayat.

US President Donald Trump reimposed sanctions after withdrawing from a landmark 2015 nuclear deal between Iran and six world powers that lifted sanctions in return for Tehran curbing its sensitive nuclear work.

By imposing fresh sanctions, the Trump administration is exerting “maximum pressure” on Iran aiming at cutting the country’s oil sales to zero, to force it to negotiate a broader deal that would cover its missile capabilities and regional influence.

–IANS/AKI

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