Europe struggling to set up post-sanctions Iran trade vehicle

Europe is struggling to continue trade with Iran following the introduction of tough new sanctions by the US, the country's foreign minister said on Tuesday.

Mohammad Javad Zarif told reporters that the establishment of a Special Purpose Vehicle (SPV) to allow European countries to conduct non-dollar trade with Iran continues to meet hurdles.

Both parties are keen to side-step the new sanctions introduced this month by President Donald Trump to keep alive a nuclear agreement between Iran and world powers.

Austria has already said it would not host the SPV, due to possible US sanctions, with Luxembourg touted as another candidate to host the vehicle.

"The Europeans are facing a challenge in identifying a country to host the SPV," Zarif said, according to Reuters. 

"In reality some countries who have been suggested as hosts have not accepted this task and the negotiations for identifying a host for the SPV mechanism are continuing."

The SPV would act as a clearing house to give Iranian oil access to world markets without using dollars.

The new sanctions on Iran target the country's oil exports and banking system, with the aim at completely isolating Tehran from global trade.

Conservatives in Iran have pushed for tearing up the nuclear pact with Europe and instead focus on alternative models for funding.

This could prove more difficult with international banking hubs, such as Dubai, more wary about hosting Iranian businesses and assets.

Trump has described the nuclear pact as a bad deal for the US, and does nothing to curb Iranian expansionism in the region or its missile building programme.

Eight countries - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - have been given waivers on the sanctions by the US, giving them more time to gradually step down Iranian oil exports.