Implementation of the nuclear accord between Iran and six world powers in January has helped open new vistas for Tehran reconnecting it to the centers of international political and economic power. One facet of this reconnect is banking ties between Iran and international lenders, a former diplomat says.
The process of normalized banking relations, however, seems slower than had been expected. In a talk with the Financial Tribune’s Persian-language sister newspaper, Donya-e-Eqtesad this week, Hossein Mousavian, a former nuclear negotiator expressed his views on Iran’s banking ties to the outside world that was crippled due to the international restrictions.
“The first obstacle is that major non-American banks are still afraid of dealing with Iran,” he said, stressing that European governments cannot force their banks to reconstruct relations with Tehran because Europe’s banks had been punished severely by the US for doing business with Iran during the sanctions years.
“Shaking off a decade-old fear needs more effort, time and patience. The US government is not doing its best and needs to demonstrate goodwill and reassure the major non-American banks that they can do business with Iran.”
The second point the former envoy raised is Iranian lenders’ long separation from the international banking system. “Our lenders’ standards and services are now far from advanced international banking standards and it will take time for them to bridge the gap.”
Some of the banks punished by the US Department of Treasury had pledged not to cooperate with Iran for a specific number of years, according to Mousavian. He added that “in some cases this prohibition period has not ended for some of the banks.”
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The former foreign ministry official stated that new rules and regulations regarding money laundering and terrorism financing activities have been ratified by international banks which have not been yet adopted in Iran. “Settling this issue requires legal, technical and political action that will take some time.”
The fifth point he highlighted was about “those outside Iran who benefit from the sanctions.” Some foreign lenders and middlemen imposed an extra 15% commission surcharge on Iran’s banking transactions. “Like their domestic counterparts, the foreign middlemen want the old sanctions regime to stay in place.” He did not name names.
Pointing to the impossibility of transferring money by Iranian banks and companies during the sanctions’ era, Mousavian said foreign credit insurance agencies had to cover Iranian banks’ and companies’ due payments and now the country has to settle huge debts with foreign credit insurers.
“If we do not settle these debts, foreign insurers like SACE and COFACE will not be able to open new credit lines for us. The CBI officials are now negotiating for settling this issue which too is time consuming.”
Asked about the restrictions on Iranian and foreign banks wanting to transact in dollars or U-turn dollar transactions, the former nuclear negotiator opined that settling this issue is subject to bilateral talks between Iran and the US.
“Lifting restrictions on Iran’s dollar transactions means that the primary US sanctions against Iran must be removed. However, it entails dangers as the US will be able to easily seize Iran’s assets in dollars if U-turn transactions are reconnected.”
