The Export Guarantee Fund of Iran is now a member of the Berne Union, realizing a long-time pursuit of the country's main export credit agency. The move was made possible after Berne Union and the Prague Club agreed to create a new global association for export credit and investment insurers earlier this week.
Iran was formerly a member of Prague Club -- an information exchange network for new and maturing insurers of export credit and investment – and its bid to join the Berne Union, the International Union of Export Credit Insurers, had been an exercise in futility.
“We have been trying to join the [Bern] union and although the EGFI was eligible, we were not accepted as a member as some lobby groups were opposed to us,” Arash Shahraini, EFGI deputy chief, told the Financial Tribune on Tuesday.
"Membership in the Berne Union provides us with extended opportunities to expand our network," he said.
The decision was made at the spring meetings of the two bodies in Warsaw, where EGFI reached agreements with some foreign ECAs, to prepare the ground for boosting Iran's commercial relations in the post-sanctions era and in the absence of robust banking relations with the outside world.
The new integrated Berne Union will have 81 members from 73 countries.
“The fund is now capable of offering guarantees for Iranian contractors working on overseas projects,” he said. “These guarantees are usually issued by banks, but in the absence of banking relations EGFI would issue the guarantees and transfer them through the ECAs in other countries.”
Berne Union President Topi Vesteri said “the significance of this full integration of credit insurers supporting larger and smaller export communities contributes to a much closer framework among experts and a stronger voice for our products globally."
Ties With Swedish, Austrian Agencies
EGFI also signed agreements with Sweden’s EKN and Austria’s OeKB, during the Berne Union’s spring sessions, according to Shahraini.
The agreements aim to expand the two ECAs’ cooperation on identifying opportunities for trade of goods and services, co-financing, reinsuring and coinsuring projects or contracts in third countries involving Swedish, Austrian and Iranian exports.
Export Guarantee Fund of Iran and the Swedish National Export Credit Guarantee (EKN) had agreed last month to expand cooperation and support trade between the two countries’ private sectors. EKN has also reintroduced its coverage for Iran after the sanctions were lifted in January.
“Basically, credit agencies are allowed to guarantee only investments and trade deals of their own citizens,” he said, “ but in order to promote and protect domestic production, the Ministry of Industries, Mining and Trade and the EGFI have reached an agreement to offer partial coverage even for foreign investments.”
He elaborated by saying that domestic production has the potential to provide raw material or workforce for foreign investment projects and the EGFI is allowed to co-insure domestic parts of projects not covered by the other country's ECA.”
