A Semblance of Solace

Officials and analysts in Tehran have responded to the United State’s latest move to help further ease restrictions on Iran, saying its positive outcome can and will emerge in the near future.

The Office of Foreign Assets Control (OFAC) affiliated with the US Treasury Department on Friday published guidelines for international businesses, saying some previously prohibited dollar transactions with Iran by offshore banking institutions are now allowed as long as they do not enter the US financial system.

OFAC also removed a blanket ban on foreign transactions with Iranian firms that may be controlled by an entity or individual subject to US sanctions.

Referring to the easing of the dollar transactions, the director general of the International Affairs Department of the Central Bank of Iran said with OFAC’s move the process of converting non-dollar currencies into euro will become much easier.

“To partially remove dollar sanctions on Iran, tacit agreements had been made before but OFAC’s announcement makes them official,” Hussein Yaghoubi told IRNA.

“To change currencies like the South Korean won, the Chinese yuan or the Japanese yen into a preferred currency such as euro, these currencies first need to be measured against the US dollar and then exchanged into the currency of choice.”

A process which he says was near impossible in the past, but is now doable as a result of OFAC’s announcement. “Negotiations were held in the past to remove these restrictions but banks would issue licenses only on a case-to-case basis.”

In accordance with Iran’s nuclear deal with world powers that came into effect in January, international sanctions were to be removed. The US, however, has continued to maintain sanctions on many Iranian companies and individuals, prompting complaints from Tehran that Washington has failed to implement its side of the deal.

However, the new Treasury policy says foreign transactions with non-sanctioned entities that are nonetheless “minority owned” or “controlled in whole or in part by an Iranian or Iran-related person on the SDN list” are “not necessarily sanctionable” under US regulations.

The SDN -- specially designated nationals -- list comprises of certain Iranian companies and people who are still subject to US sanctions for a variety of reasons, including Iran’s ballistic missile program, human rights record and support for groups the US claims to be terrorist organizations.

  A Glimmer of Hope

The head of the Exports Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture also weighed in on the issue, pointing to its benefits for Iranian commerce.

“OFAC instructions mean that Iranian businessmen and traders can now make deals with other countries,” said Razi Haji-Aghamiri in a talk with the official website of the Tehran Chamber of Commerce, Industries, Mines and Agriculture.

“In the past, Iranians were forced to opt out of deals made in the greenback.  With OFAC’s new instructions, such deals are now possible.”

But the official sees beyond the new instructions and says what really matters are the actions undertaken by Washington against Tehran.

“They fell short of honoring some of their commitments under the nuclear deal and simply failed to act on a number of them,” he said. “But the new instructions are a glimmer of hope that could and should lead to the removal of more barriers in the future.”

  Better Late Than Never

An economic and banking expert, however, believes that the recent developments should have come much sooner, but hails them nonetheless.

“Although dollar sanctions on Iran should have been removed long ago, it is still an auspicious development that will help allay foreign companies’ fears in doing business in and with Iran,” Seyyed Bahaoddin Hosseini Hashemi told IBENA.

“The restrictions had made necessary the presence of an intermediary country and these countries took (undue) advantage of the situation in more ways than one,” he said. “With the removal of dollar sanctions, not only will the misuses come to an end, but also the high costs emanating from payments to intermediaries will be removed.”

Noting that Iranian banks were facing problems in expanding their correspondent relations, the former CEO of Bank Saderat and Tat Bank said OFAC’s instructions will further ease bank transactions.

The expert says with the removal of dollar sanctions “restrictions related to fighting terrorism could increase from the FATF”, but assures that this will be easy to resolve and “will not hinder trans-border deals.”

FATF is an intergovernmental organization that was founded in 1989 to combat money laundering, later expanding its mandate to act on terrorism financing in 2001. The group decided in late June to keep Iran on its blacklist of high-risk countries but welcomed Iranian promises to improve and called for a one-year suspension of some restrictions on Tehran.

Hosseini Hashemi emphasized that in tandem with the opening up of the economy, Iranian banks must also adhere to international standards.

“The willingness of international investors or banks in dealing with their Iranian counterparts alone cannot end the economic stagnation,” he noted. “Until Iranian banks do not conform to international norms and make their financial statements transparent, no positive change will occur” in the process of economic regeneration and rebuilding normal trade ties with the outside world.