As sanctions on Iran are to be lifted later this year, US businesses could be the biggest losers in the rush to stake a claim in Iran—especially the banking sector, a report says.
"Even though there is an agreement things will still move slowly, especially for US companies," Matthew Oresman, public policy and international trade specialist at global law firm Pillsbury, told IBitimes on Saturday.
The July 14 agreement to lift economic sanctions in trade for Iran's promise to put some limits on its nuclear energy program was unanimously approved by the UN Security Council, and also by the EU, on July 20. But the agreement still faces tough hurdles in the US, the report noted.
"The European Union has committed to removing many of the sanctions limiting business transactions and financial dealings with Iran, including banking and insurance," Oresman said, pointing out the EU has committed to remove Iran's state-run enterprises from its blacklist.
"For US companies, things may not move as fast. US banks will not be able to engage in most Iran-related transactions, especially with an Iranian counter-party, except in very limited circumstances. European banks should have a much freer hand."
The Iran deal, known formally as the Joint Comprehensive Plan of Action, will be hampered by the 1996 US-Iran Sanctions Act, extended by US President Barack Obama in 2013, which blocks US financial institutions from making loans or giving credit to Iran. The Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 adds further complications. Whether these laws stand is down to US Congress.
The laws also create a significant obstacle for European banks that have a US presence. "European banks with US subsidiaries will need to proceed cautiously," said Oresman.
But it's more likely they will be outmaneuvered by "Chinese, Indian, and other large non-western players, [as well as] smaller European or regional trade banks that do not have US ties," Oresman added.
On the other side of the coin, "most Iranian banks will still not be able to open up correspondent accounts with US clearing banks or engage in financial transactions with US banks," said Oresman. "This underscores the notion that the president will be limited in the sanctions relief he can provide."
