European Union’s Federica Mogherini with Iran Foreign Minister Mohammad Javad Zarif on sidelines of UN General Assembly, September 2018 (Aleksandr Shcherbak/TASS)

The European Union’s foreign policy chief says a mechanism for non-dollar trade with Iran, bypassing US sanctions, is likely by the end of December.

Federica Mogherini told reporters in Brussels on Monday, “I will expect this instrument to be established in the coming weeks before the end of the year as a way to protect and promote legitimate business.”

Mogherini did not offer further details about the Special Purpose Vehicle, following a meeting of EU foreign ministers, but said work on its creation is “advancing well”.

The EU official and Iranian Foreign Minister Mohammad Javad Zarif agreed the SPV in September. It provides for transactions, including European purchases of Tehran’s oil and gas, in euros.

The arrangement challenges comprehensive US sanctions, including on Iran’s energy and financial sectors, imposed on November 5. The American measures threaten punishment, which could amount to billions on dollars, on firms that continue links with the Islamic Republic.

The EU has said it will shield small and medium enterprises, but it has struggled to provide guarantees for large companies. As a result, many such as France’s energy giant Total have withdrawn from Iranian projects.

In late November, Iran’s nuclear chief Ali Akbar Salehi and Deputy Foreign Minister Abbas Araqchi warned, after talks in Brussels, “If words are not turned into deeds, then…it is very ominous, the situation would be unpredictable.”

Iran Daily, Nov 27: European Union Hosts Top Iranian Officials Over Nuclear Deal, US Sanctions