When the US announced its exit from the Iran Nuclear Deal and issued new sanctions against Iran, the repercussions were more than political, and severely limited the trading ability of businesses in the European Union (EU).
European leaders have since worked to develop an alternative method of enabling financial transactions that could see businesses cooperate with Iran, while still under limited circumstances.
The recently announced step was to form INSTEX to ‘support legitimate trade’, with an initial focus on the pharmaceutical, medical devices and agri-food goods industries.
The partnership stated: “The E3 (Germany, France and the UK) underline their commitment to pursue the further development of INSTEX with interested European countries to make this instrument in support of trade exchanges with Iran operational.”
The trade mechanism will likely not become operational for several months.
Novo Nordisk watches on
A Danish media report, in Politiken, suggested that a financial manager at Novo Nordisk, which has a significant presence in Iran’s market, welcomed the decision to create INSTEX.
Novo Nordisk has had operations in the country since 2005, where it has been able to maintain its business due to the exemption of pharmaceuticals from any sanctions in the country.
A spokesperson for Novo Nordisk told us, “The new [US] sanctions that have been implemented mean limited banking route options, which has made it more difficult to run our business than previously. We are actively working on identifying solutions and as part of that we are monitoring the developments of the European instrument, INSTEX.”
In 2015, Novo Nordisk revealed that it would be investing €70m ($78m) in the development of a manufacturing plant in Iran.
The facility produces prefilled, disposable insulin products for the country and, with an estimated population of 81 million, the market for insulin products is significant.