Senior Businessman Expects Iran Int'l Banking Ties to Improve Soon

Iran’s banking relations with the world will improve by the end of the current fiscal year in March, the deputy for international affairs at the Iran Chamber of Commerce, Industries, Mines and Agriculture said. 

“In my opinion, a major part of the country’s banking problems with the international community will be resolved by the yearend, but the way American officials deal with these developments will also be an important factor,” Mohammad Reza Karbasi was also quoted as saying by Banker.ir.

“Normalizing Iran’s banking ties with other countries is time-consuming and relations that declined over a decade cannot be expected to improve and recover overnight.”

The official, who is also the secretary-general of ECO Chamber of Commerce and Industries–a regional organization established by Iran, Pakistan and Turkey for promoting economic, technical and cultural cooperation among its member states–added that a year has passed since the implementation of the Iran nuclear accord and in spite of the US hostility, “we have witnessed positive results”.

Iran’s nuclear deal was reached on July 14, 2015, with six world powers and implemented on January 16, 2016. The landmark accord placed time-bound constraints on Tehran’s nuclear activities in return for sanctions relief. 

“If it were not for a number of regulation-backed measures by the US, Iran’s relations with international banks and financial institutions would have normalized further,” Karbasi said. “But Iran has also not remained silent and has expressed its objections to the world authorities.”

Since the removal of international banking restrictions in January, Tehran has secured links with only a limited number of smaller banks as US sanctions remain in force and large foreign institutions still fear potential fines.

Banks remain nervous after US penalties, including a $9 billion fine on France’s BNP Paribas in 2014, partly for violating financial sanctions imposed in 2012 to pressure Iran to abandon its nuclear program. 

 Past Penalties 

The official noted that major international banks are “very eager” to work with Iran, but because of negative past experiences and US fines, they are now treading with more caution in their links with Iran.

Referring to the new administration in White House, Karbasi noted that considering “a lack of correct vision and positive political and economic approach toward the nuclear deal”, Iran would have to wait until the end of 2017.

He added that the pressure exerted on the US by European banks wishing to reconnect with Iran would surely prove effective.

“Iran currently has good ties with Turkey, China, Russia and a number of Asian and European countries, which were lacking before,” he said.

Karbasi said the privately-owned Middle East Bank and Parsian Bank have established correspondent relations with international counterparts.  

“Fortunately, the connection of these banks with the world shows that fears of reconnecting with Iran are dissipating,” he said.

Two other representatives of the business community have also spoken of the matter during the past few days, complaining that lack of proper banking channels continues to disrupt the sanctions removal process. 

Mohsen Bahrami Arz-Aqdas, the head of Trade Facilitation and Export Development Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture, for instance, said Iranian businessmen can now reopen letters of credit in a number of countries, “but our problems with countries that work with the US dollar have yet to be solved”.

However, he noted that a directive issued by the US Treasury allows other countries to engage in dollar transactions with Iran without fearing sanctions.

Majid Reza Hariri, the deputy head of Iran-China Chamber of Commerce and Industries, on the other hand, believes that the shadow of sanctions continues to hang over the country.  

“Sanctions are still not removed [completely] and the country is under their influence,” he said, stressing that “only when Iranian businessmen are able to have smooth banking relations with international companies that we can say sanctions have been lifted.” 

The Central Bank of Iran has reported that after the sanctions and at the beginning of 2016, the bank has succeeded in opening 40 accounts with European and Asian counterparts, including the central banks of Italy, Austria and Japan, and commercial banks of Austria, Switzerland, Belgium, Spain, India, South Korea, China, Turkey and Russia through which “currency transfers are underway.”