International banking constraints looming over Iran’s economy will persist until the US presidential election in November, a prominent energy analyst said at the weekend.
CNN Money recently reported on issues facing European banks in dealing with Iran. Many prominent European companies have clinched deals with Tehran following the easing of sanctions. But the European banks’ concerns in dealing with Iranian counterparts have caused serious problems.
According to Narsi Qorban as reported by the website of the Iran Chamber of Commerce, Industries, Mines and Agriculture, “at the moment, banking issues have cast a shadow over everything.”
“The situation we are currently witnessing will continue until the general elections in the United States,” he said.
When most European banks that worked with Iran before the sanctions tried to reestablish links while the international restrictions were still in place, they found themselves forced to pay billions in fines to the US. Qorban says that is why the 80-million-strong Iranian market – which can be a very attractive place for investors– has found itself in a quagmire, with most trade transactions in the US currency still facing major hurdles.
Banks view US dollar business with Iran as particularly risky because the residual US sanctions prohibit trade with Iran in dollars and Iranian access to New York’s financial system.
“In my opinion, a number of smaller European banks will gradually restart cooperation with Iran, with collaboration most likely taking place outside the jurisdiction of the greenback, using currencies like the euro, Japanese yen and the Chinese yuan,” says the analyst.
Reuters reported last month that Iran is gradually restoring banking links with the rest of the world by forging ties with smaller foreign institutions, even though large global banks are still holding back because of legal risks
Noting that US Secretary of State John Kerry, as a senior member of the American political establishment, strived to reassure major European banks – especially those in London – to rekindle their dealing with Iran, Qorban talked of the skepticism that is still felt, specifically in the case of German banks, which still have very limited links to Iranian banks.
Referring to other impediments and barriers adding to the concerns felt by the European banks, the analyst stressed that one of the main problems can be traced back to Iran’s banking system, “which needs to be modernized
