Humanitarian Trade Mechanism Brings Some Relief to Iran

In late March 2020, the beleaguered Islamic Republic of Iran enjoyed a brief respite from what seems an unending string of setbacks with disastrous consequences for its citizens. Three European nations announced the first successful transaction under the Instrument in Support of Trade Exchanges (INSTEX), a special mechanism that had failed earlier this year, but which now allows to export medical equipment and supplies to Iran while bypassing sanctions imposed by the United States.

The INSTEX program may seem like a ray of hope for Iran, there are concerns about its reach and sustainability. This mechanism will certainly ruffle political feathers, but there are greater concerns about how the U.S. and Iran may react as INSTEX continues to operate.

The COVID-19 pandemic could not have arrived at a worse time for the good people of Iran. As of mid-April, more than 5,000 deaths had been reported and nearly 85,000 infections confirmed by public health officials, but many Iranians and international organizations suspected that the release of these statistics had been less than transparent. The Iranian government has been criticized for what many consider to be a slow and inefficient reaction to a global health crisis; moreover, the strained relationship with the U.S. made everything even more complicated.

Ever since U.S. President Donald Trump decided to abandon the Joint Comprehensive Plan of Action, also known as the Iran Nuclear Deal, Iran has been mired in an economic crisis that has deeply uprooted life for millions of families. The decision included reinstating a series of sanctions intended to put maximum pressure on the Iranian regime; on top of the old sanctions, President Trump imposed a new set of onerous restrictions that severely constrained Iran’s ability to conduct international trade.

The problem with the American sanctions on the Islamic Republic is that they contravene what is known as humanitarian trade. As explained by Atlantic Council fellow Amir Handjani in 2019, U.S. sanctions on Iran have become draconian to the point of preventing humanitarian goods that Iranian families are in desperate need of. Every economic sanction and trade restriction is supposed to feature certain exceptions to allow agricultural goods and medical supplies to be imported for the benefit of civilian populations, but this is not happening because of the ways sanctions are structured.

In theory, the concept of humanitarian trade would preclude the need for the INSTEX program. Recognizing that people need to eat and stay healthy in order to avert a humanitarian crisis should not require assembling team of legal specialists and diplomats from various countries so that they can comb through laws, regulations, and thousands of pages of legal documents, which is how INSTEX was finally able to ship medical supplies to Iran.

The INSTEX effort is similar to what big law firms and investment banking entities do when they hire junior attorneys to do massive amounts of legal research. The young lawyers apply a fine-toothed comb approach as they review dozens upon dozens of contracts and court documents; the goal is to find loopholes or hidden strategies that can be pursued in court for profit. Since the American common law system is adversarial in nature, such a strategy is not surprising, but when it comes to international law for the sake of humanitarian trade, it is a shame to think that European nations need to come up with INSTEX.

The reason INSTEX is needed is that the aggregate of U.S. sanctions have primary and secondary declarations that end up impeding humanitarian trade, but they do not do so explicitly. There is no preamble that suggests trading of food and medicine is prohibited because such a declaration would be a cruel violation of human rights, but the legalese contained in the hundreds of pages of each sanctions end up scaring the lights of prospective trade partners. A rice farmer in Japan, for example, could be worried that selling goods to Iran may run afoul of the sanctions, thus shutting her out of the American market.

Now that INSTEX, an incredible feat of legal research and certainly a noble gesture by France, Germany, and the United Kingdom, has proven to work, the international community still has a few things to worry about. The legality of INSTEX and its cunning way of not contravening sanctions will not stop the U.S. and Iran from acting foolishly. The assassination of Iranian General Qasem Soleimani in early 2020 and the subsequent retaliatory missile attacks have elevated tensions in the Middle East. To make matters worse, there are no signs that suggest Iran wishes to comply with the JCPOA anymore. INSTEX or not, there needs to be some sort of diplomacy between the U.S. and Iran, and this will require more than humanitarian trade.

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