Germany’s central bank, Bundesbank, has revised its regulations to stop Iran from withdrawing €320 million ($400 million) in cash from the country’s bank accounts.
Under the new conditions, Bundesbank can stop cash transfers that violate US Treasury sanctions, the German newspaper Bild disclosed.
The drastic measure to physically ship the cash out of Germany has been interpreted as a sign of Tehran’s declining trust in European financial institutions, as the US Treasury tightens its screw on the Persian Gulf country's global financial operations.
The repatriation would have been “one of the largest cash transfers ever in German history”, a spokesman for the country’s finance minister admitted.
Last month, Iran initiated steps to withdraw €320 million from German bank accounts and transfer the cash to Tehran. The money in question is held by Hamburg-based European-Iranian Trade Bank (Eihbank).
The Bild broke the story on Wednesday.
Bundesbank has amended its general terms and conditions with regard to "cash transactions". According to these terms, the central bank can demand clarifications and guarantees from the counterparty seeking a cash transfer.
The central bank can refuse the transaction till procedures are clarified.
Even when no suspicion of terrorism financing or nuclear armament may exist, Bundesbank can deny cash transfer—for instance in case of a US embargo.
In May, US President Donald Trump withdrew from the 2015 Iran nuclear deal, calling the deal negotiated by the previous US administration flawed.
German Qualms
According to the website, Legalinsurrenction.com, the latest Bundesbank measure should come as a blow to German Chancellor Angela Merkel, who has staked considerable political capital on saving the faltering deal.
Merkel, a fervent backer of the deal, has been at the forefront of efforts to salvage the pact despite a US withdrawal.
She is also under pressure from German companies that are set to lose billions from the new US sanctions. German companies like Daimler, Siemens and Volkswagen have been among the leading beneficiaries of the opening up of Iranian market in the wake of the deal.
In July, Reuters reported the Trump administration’s efforts to stop the massive cash delivery to Tehran and the German government’s hostility to such a measure.
Richard Grenell, the US ambassador to Germany and a longtime critic of the Iran nuclear accord, told Bild that the US government was extremely concerned about Tehran’s plans to transfer hundreds of millions of euros in cash to Iran.
“We encourage the highest levels of the German government to intervene and stop the plan,” he said.
Grenell’s comment drew a rebuke from Johann Wadephul, deputy leader of Merkel’s conservatives in parliament, who said the transaction should not be blocked on political grounds, if it passed legal muster.
“The statement of the US ambassador is once again unsettling and difficult to reconcile with his diplomatic role,” Wadephul told Reuters.
“Merkel’s government—widely considered one of the most pro-Iran European governments—has not commented on whether it will allow the roughly $400 million in cash to be sent to Iran to undercut the US sanctions campaign,” said Benjamin Weinthal, a research fellow at the DC-based Foundation for the Defense of Democracies.
It’s not just Germany’s Bundesbank that has taken similar steps. The EU-owned investment bank has also agreed to comply with US sanctions.
As Legal Insurrection reported in June, EU’s own lending arm, the European Investment Bank, has broken ranks with Brussels by rejecting the proposal to work in Iran. The EU bank fears that doing business with Tehran in violation of the US treasury regulations will hamper its ability to raise money on international capital markets, media reports suggest.
Germany’s Bundesbank and European Investment Bank have shunned Iranian business to avoid financial losses from litigation and secondary sanctions resulting from violating the US sanctions on Iran.
Bundesbank’s “move could be politically precarious, as it could mean the collapse of the Iran nuclear deal, which the European Union still hopes to salvage”, German public broadcaster Deutsche Welle said.
