The long-awaited Swiss payment channel for processing food and medicine trade with Iran has been given the finishing touches to become operational, a member of board of representatives of Tehran Chamber of Commerce, Industries Mines and Agriculture said.
Mehdi Masoumi Esfahani, deputy head of TCCIMA Water and Food Industries Commission told the Financial Tribune Iranian funds from Japan have been transferred to Swiss lender Banque de Commerce et de Placements (BCP) for humanitarian trade and the channel is now operational.
The London-based Financial Times reported in December that Switzerland is close to launching an initiative to let companies sell food, medicine and medical equipment to Iran using a payment channel that would be the first of its kind to win Washington’s approval after it re-sanctioned Tehran.
The payment mechanism has Washington’s backing on the premise that food and medicine are not included in its new list of economic sanctions announced in November.
Sharif Nezam-Mafi, president of Iran-Switzerland Joint Chamber of Commerce, told Iran Chamber news website earlier that the channel is ready but waiting for Iranian funds mostly parked in Asian banks.
BCP did not respond to the Tribune's request for comment.
No Match for SPV
Masoumi Esfahani said although the payment channel is a crucial conduit for Iran to make up for food and medicine shortages, it is no match for the European mechanism known as Special Purpose Vehicle.
Iran needs to import grain and oilseeds to meet the needs of 80million people, he said. Since the steep increase in currency rates last year, the price of many staples including meat and chicken have shot up by more than 50% despite the fact that the government allocates subsidized foreign currency for the import of 21 basic goods including food items.
In a recent report, the Central Bank of Iran acknowledged that the price of red meat and chicken have risen more than non-essential goods, growing 5.3% in the month to Dec.21 compared to the month before.
Recent remarks by the Minister of Agriculture Mahmoud Hojjati, who said on state TV that people "should be grateful that staples are at least available even though they are expensive" went viral on social media and caused controversy.
"The SPV can and should make things much easier for us when it comes to food trade because the present manner of trading is risky and expensive," Masoumi Esfahani concurred.
So far humanitarian trade has been a cumbersome and time-consuming processes through very few banks in Turkey and India, he noted. “The SPV will lower trade costs as much as 11% for Iranian traders.”
Governor of the Central Bank of Iran Abdolnasser Hemmati said last week that Japan has resumed importing Iranian oil after China, South Korea, India and Turkey.
Japan is last of the four major Iranian oil customers in Asia to resume imports after receiving a waiver from US sanctions on crude imports that started in November.
India deposits payments for oil imported from Iran into UCO bank rupee Vostro accounts via nine Iranian lenders not sanctioned by the US.
Iran will use the rupee account to import goods ranging from food to medicine. China's Bank of Kunlun is another conduit which handles Iran payments for non-sanctioned goods, which Iranian traders say is lengthy and irritating.
"If the SPV fails, there will be no other way for us to conduct trade because no other banks have permission to handle [humanitarian trade]," Masoumi Esfahani acknowledged.
European powers were supposed to unveil the SPV on Monday, but disagreements between some EU members apparently delayed the long-awaited announcement.
Acting president of Iran Trade Promotion Organization Mohammad Reza Modoodi told Tasnim news agency on Wednesday that the planned SPV will be hosted in France, managed by Germany with the UK having a role in its maintenance.
The official added that ITPO has not received any official word from the Foreign Ministry on SPV and it is not clear whether the channel will also cover non-humanitarian goods.
