Iran's Trade Ties With Switzerland Flourishing Under Sanctions

Iran-Switzerland trade relations have been growing in recent years despite unilateral sanctions imposed by the United States on the Islamic Republic.
Iran’s imports from Switzerland stood at 672,000 tons worth $539 million in the first four months of the current fiscal year (March 21-June 22), according to the head of Iran-Switzerland Chamber of Commerce.
“During the first months of the current fiscal year, trade exchanges have been expanding and most of the imported goods are cereals and medical equipment,” Sharif Nezam-Mafi was also quoted as saying by IRNA.
“Despite all the financial and banking problems, we are witnessing growth in trade with Switzerland, although the volume and amount of exchanges are still lower than expected.”
Switzerland was the fifth biggest exporter to Iran during the period under review after the UAE with 4 million tons of goods worth $4.7 billion, China with 1 million tons worth $3.1 billion, Turkey with 1.3 million tons worth $1.5 billion and Germany with 351,000 tons worth $563 million of shipments.
The transport agreement with Switzerland, signed during a visit to Bern in 2018 by former Iranian president, Hassan Rouhani, envisages the complete liberalization of the transport of goods and the removal of administrative barriers. A bilateral trade agreement has been in force since 2017, according to Swissinfo.ch.
“Collaboration in the transport sector is part of the roadmap Switzerland and Iran agreed upon in 2016,” a spokesman for the Federal Department of Foreign Affairs said.
The roadmap, he added, is the basis for deepening Swiss-Iranian relations.
The agreement is an example of Switzerland’s efforts to keep up its good economic and diplomatic relations with Iran.
“Since the nuclear deal was agreed upon in 2015, Switzerland has been trying to reactivate its economic and trade relations with Iran,” said Christian Blickenstorfer, former Swiss ambassador to Saudi Arabia, the United States and Germany, who was also political counsellor at the Swiss Embassy in Iran in the 1980s.
“After the nuclear deal and the gradual lifting of sanctions, several European countries were hoping to expand their relations with Iran.”
Even though Switzerland adhered to the sanctions imposed by the United Nations on Iran in 2007, it only partially observed the sanctions put in place by the European Union a few years later.
After the implementation of the nuclear deal in 2016, Switzerland even lifted some of its sanctions.
“It was clear that Switzerland had to adhere to the sanctions imposed by the UN, but not to the sanctions imposed by the US or the EU,” Blickenstorfer said.
The problem with the US sanctions was that companies and banks that did not observe these sanctions were at risk of being prosecuted in the US. "Companies doing business in the US as well as banks are not prepared to take such risks,” he added.

Humanitarian Channel

Switzerland managed to find a partial solution to the problem. In February 2020, a payment mechanism for the delivery of humanitarian goods to Iran came into force.
Under the “Swiss Humanitarian Trade Arrangement”, Swiss firms in the food, pharmaceutical and medical sectors have a secure payment channel with a Swiss bank for their exports to Iran.
“The payment channel for the delivery of humanitarian goods and pharmaceuticals to Iran could only be launched with the agreement of the US. It was conceived for purely humanitarian reasons to avoid a shortage of essential goods in Iran,” Blickenstorfer explains.

Longstanding Ties

Switzerland managed to broker this payment mechanism in cooperation with the relevant authorities in the US and Iran. It has nurtured good diplomatic relations with Iran for the past 100 years and represented US interests in Iran since 1980 through its protecting power mandate.  
“This mandate to represent US interests … allows Switzerland to maintain normal relations with Iran,” says Blickenstorfer, adding that relations were not always easy. “In Iran, we are dealing with a government that is completely different from ours.”
During his election campaign, US presidential candidate, Joe Biden, pledged to reactivate the nuclear deal with Iran.
“If Biden were to seek dialogue with Iran just like Bill Clinton did, the well-functioning Swiss payment channel could be of use to him,” Blickenstorfer said.  
Switzerland acts as an intermediary between the United States and Iran.