‘If You Can’t Beat ’em, Join ’em’: An Argument for US Support of and Participation in INSTEX

Abstract

US policymakers have said little in response to the Instrument in Support of Trade Exchanges (INSTEX) and its efforts to seemingly undermine US economic sanctions by downplaying its significance and making a single threat of severing European access to the US financial system. Should INSTEX be feared? INSTEX, which currently has ten European members, has been marketed as a humanitarian mechanism largely directed toward Iran to preserve the Joint Comprehensive Plan of Action and mitigate the impact of US economic sanctions by helping to facilitate trade in medicines, medical devices, food, and other humanitarian goods. I argue that US efforts to quash or undermine INSTEX are counterproductive to US interests and US foreign policy and that the US should work collaboratively with Europe in both the development of INSTEX and, ultimately, through participation in it. I discuss how INSTEX’s commitment to Financial Action Task Force (FATF) principles makes it an important outlet through which the US can not only shape its development and implementation but also in helping to generate goodwill throughout the international community by permitting trade in humanitarian goods through reliable channels. Failure to address the development of this nascent special purpose vehicle has long-term implications for US foreign policy by weakening the effectiveness of economic sanctions and US financial dominance.