Although Iran was expected to benefit from the easing of sanctions soon after the so-called Implementation Day of the Joint Comprehensive Plan of Action (JCPOA), businesses and markets have realized that that is simply not the case, at least so far.
There have been some incremental improvement in the process of reviving international trade with Iran, plus some slight change in attitude toward Tehran. But the current situation is by no means acceptable. Businesses in Iran complain that they are far from the pre-sanctions situation and the recent changes have hardly had a meaningful impact on the domestic economy.
So, one may ask, why is it so? Why the non-US businesses that are the main subjects of the easing of sanctions reluctant and nervous? The straightforward answer lies in the remaining sanctions and their ambiguities. Not all sanctions against Iran have been lifted. Primary sanctions are still in force and regarding the secondary sanctions there are some ambiguities which should be clarified by the six world powers with whom Iran signed the nuclear deal.
The US Treasury, as the responsible authority for most of the pending sanctions, has not upheld its part of the deal regarding clarification of the lifting of sanctions. The business community is still unsure that dealing with Iran in the JCPOA framework would not entail more US penalties.
Faced with such criticism by the non-American firms and Iranian authorities, US officials claim the problem is Iran itself, not the ambiguities and shortcomings in the lifting of restrictions. Recently, the deputy head coordinator for the 'Iran nuclear deal Implementation' at the US State Department, Jarrett Blanc, asserted at the third Europe-Iran Forum in Zurich that it is the business decisions of the international companies and not the sanctions that prevents them from doing business with Iran.
Similar claims have been made by other US authorities in recent days. It seems strange Washingtonian officials denying that the existing problems in the way to do business with Iran are due largely to the sanctions. They are accusing Iran of issues such as lack of a sound AML/CFT framework, inadequate financial regulatory regime, lack of compliance function in bank and financial institutions, and shortcomings in the general legal and judicial systems. They refer to these issues and problems as the main obstacles to working with Tehran.
But this simply does not explain why other countries with similar or even worse regulatory deficiencies do not suffer from such problems and are doing business with the outside world without any hassles. Why international banks and financial institutions have not ceased business with less resilient and poorly regulated banks in Middle East and elsewhere? Moreover, these assertions do not even explain why Iran is not even able to restore the pre-sanctions banking network it had with major international banks.
It needs mention that before the sanctions, Iran had had an extensive network of correspondent banking relations with nearly all major non-US banks. Now, in the post-sanctions era, even reviving that network seems unmanageable. Was the AML/CFT framework in Iran before the sanctions more developed than today? Was the banking regulation and supervision at that time more sophisticated than the current regime? It is evident that the reality is the other way round and the current regulatory framework in Iran is much more developed than it was before the sanctions were imposed.
No one claims that regulatory framework in Iran is ideal and there is no room for improvement. But acknowledging some difficulties in regulatory deficiencies is one thing and attributing all difficulties in international trade and economic collaboration with Iran to these factors and putting the sanctions at the second tier is something else.
The infamous US habit of interpreting and enforcing the sanctions regimes against Iran and other countries has made it pretty clear that the US is not trustworthy. Its treasury has sometimes enforced sanctions retrospectively, based its designations on unverified assumptions and unproven accusations, imposed disproportionate penalties and fines on banks and financial institutions and lacks any meaningful mechanism for judicial review.
This is the main reason for the reluctance of international firms to reengage with Iran. US officials are fully aware of the facts and their attempts to attribute the current problems to other factors are not acceptable by Tehran or the international companies wanting to do business in and with Iran.
