The European Union fundamentally disagreed with US President Donald Trump’s unilateral decision to pull out of the 2015 nuclear deal with Iran (Joint Comprehensive Plan of Action - JCPOA), where Iran was to curb its nuclear and ballistic programme in return for international sanctions being lifted. The period before the US reneging on the deal (between 2015 and 2018) saw a brief glimmer of global integration hope for Iran, and enabled multinationals including Renault, Airbus and Total to venture into Iran.

Post the US pull out, the EU was left scrambling to find a way to uphold the deal, which it sees as necessary to keep the US flip-flop in check and reducing the impact of the extra-territorial sanctions.

The first week of February saw three of the eight signatories to the Iran nuclear deal, formally establishing the INSTEX (Instrument for supporting Trade Exchanges). France, Germany and the UK established this as a special purpose vehicle to allow them to bypass US sanctions on trade with Iran.

The INSTEX has been set up to enable non-dollar trade between Europe and Iran, and as a mechanism, will deal with food and medicine (humanitarian non-sanctioned categories by the US). In all the excitement around INSTEX, it is key to note that it crucially excludes oil and gas. Unless there is a dramatic change of events or inclusion of hydrocarbons into the scope of INSTEX, it seems like a minor cosmetic face-saver for the three European nations in their dealings with Iran.

However, what’s interesting is the side show Iran has been having with China in recent times. Iranian Foreign Minister Javad Zarif recently met with his Chinese counterpart, Wang Yi, who welcomed Iran’s efforts to deepen “strategic trust” with China. The delegation from Iran included Iranian parliamentary speaker Ali Larijani, the leader of Iran’s central bank and the country's finance and petroleum ministers.

Pre-sanctions, China had been the largest global importer of Iranian oil, cementing its importance as an economic partner to Tehran. In turn, Iran imported a significant amount of manufactured goods from China. That leaves a variety of possibilities in terms of bartering arrangements that could bypass US sanctions. A payment channel already exists between China and Iran through the Kunlun Bank, although the volume of transactions that can be facilitated through this channel would not be sufficient to fulfil the Iranian desire for large scale trade in oil, goods and financial transactions.

Chinese energy majors are now importing 360,000 barrels per day, of crude oil from Iran. This is only half of what they were importing before the US pulled out from the deal and the imposition of sanctions.

This is a worrying aspect for Iran. It shows that China has appeared willing to comply with US sanctions, and its larger firms would avoid irritating the US. Perhaps, smaller banks and companies that China could more easily shield from US sanctions, are the way forward, but then, there always will be a volume limitation. Though China and the EU remain important Iranian allies, it will be difficult for them to defy the US pressure. There might be toasts raised for respecting Iran’s right to global economic integration, and more of the smaller initiatives like INSTEX or small Chinese measures, but anything substantially concrete to allow for the integration remains a distant dream.

The writer is a geo-political analyst