Business And Markets

EU Pushed Back When Trump Sanctioned Iran’s Banks in Oct.

EU Pushed Back When Trump Sanctioned Iran’s Banks in Oct.EU Pushed Back When Trump Sanctioned Iran’s Banks in Oct.

Germany, France and Britain urged the Trump administration in late October to reconsider broad, new sanctions against Iran’s banks, arguing that the move would deter legitimate humanitarian trade and hurt the allies’ common interests, diplomatic correspondence shows.
Germany’s Bundesbank also kept a multi-billion-euro deposit facility open for Iranian banks, including two that faced fresh US sanctions, giving Tehran a much-needed banking lifeline at a time its access to the global financial system was largely cut off, according to central bank data and interviews with bankers, western diplomats and officials.
The behind-the-scenes pushback to Washington and the extent of Germany’s support to Iranian trade in the face of US sanctions have not been previously reported, and shed new light on the divergent approaches to Iran taken by Donald Trump and the US allies, Reuters reported. 
The letter came after the United States imposed sanctions on October 8 against 18 Iranian banks as part of a campaign to exert “maximum pressure” on Tehran. The order barred Americans further from dealing with the Iranian banks and extended secondary sanctions on foreign companies that did business with those lenders. For foreign banks, violations could mean losing access to the US market and raise the specter of hefty penalties, even although US sanctions, legally speaking, don’t apply in Europe and other jurisdictions.
In their joint letter, dated October 26, diplomats from the three European nations told Washington that the sanctions could make food and medicine “prohibitively expensive” for ordinary Iranians in the middle of the pandemic.
“The US has always said that its aim was to target the ruling elite and not the Iranian population,” according to the letter, a copy of which was seen by Reuters. “In our view it is important to uphold this undertaking in practice.”
They sought reassurances that the United States would “not impose penalties on financial institutions processing humanitarian trade in good faith without first engaging with them.”
A spokesperson with Britain’s Foreign, Commonwealth and Development Office said the UK “does not agree with these sanctions, which affect a number of banks helping the Iranian people access vital humanitarian supplies.”
France’s Foreign Ministry declined to comment. A French diplomatic source said the letter was part of ongoing efforts by the three countries to make clear to the US administration that it would not give up on the Iran deal.
A German government official said that humanitarian channels need to remain open and that it has advocated for this.
A Bundesbank spokesman confirmed that Iranian banks held accounts with it in order to process payments but declined to comment on them individually. “The German Bundesbank is bound by national and European law, also, naturally, in relation to financial sanctions,” the spokesman said.



Bundesbank Deposits 

Germany’s political position, informed by historical ties with Iran, has helped its banks and companies play a leading role in trade with Iran, according to two experts in international payments.
Justine Walker, head of global sanctions and risk with Association of Certified Anti-Money Laundering Specialists (ACAMS), an organization of specialists tackling financial crime, said Germany stood out for its willingness to hold Iranian accounts – a stance that has continued despite the US sanctions.
Five Iranian banks - all of which are subject to US sanctions - held roughly €3.8 billion in deposit with the Bundesbank at the beginning of the year, according to the banks’ financial accounts. Some of this money has since been withdrawn, but the level of financial exposure is still above 3 billion euros, Bank for International Settlements data from June shows.
The funds are used by the Iranian banks to facilitate transactions to companies doing business with Iran, according to two finance sources with direct knowledge of the matter.

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