Global Export Credit Unions participating in a meeting of the Berne Union Credit and Investment Insurers this week backed sustained cooperation with Iran despite the US move earlier this year to pull out of the historic nuclear agreement.
According to a press release by the Export Guarantee Fund of Iran, whose representative attended the event, the countries present declared that insuring trade with Iran is possible under the existing circumstances.
Arash Shahraini, a member of board of directors and technical deputy of EGFI told the Financial Tribune on Sunday that while there was a positive mood of support for Iran coverage at the meeting, members were cognizant of the fact that lack of a proper banking channels for payments to Iran continues to be a main hurdle to promoting Iranian trade with the outside world.
"When it comes to Iran trade, there is no problem about financing as some funds have expressed their willingness to handle the situation," Shahraini said. "As was declared in the Paris gathering, there are no problems regarding trade insurance, but the issue of finding an agent bank to handle payments remains unresolved.
He hoped that European powers efforts to create an alternative payment network for facilitating trade with Iran would produce the desired results.
Following a ministerial meeting on September 24 in New York, the participants welcomed an EU initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran’s exports (including oil) and imports.
US President Donald Trump in May pulled out of the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), despite objections from other signatories of the landmark accord.
In August, Washington re-imposed the first round of sanctions on Iran it had lifted under the JCPOA. A second round, forthcoming on November 4, will be targeting Iran's energy sector and financial transactions.
Positive Performance
At the Bern Union meeting, EGFI Head Kamal Seyyed Ali referred to Iran's positive performance in meeting its financial obligations, reimbursing currency debts and its abundant foreign exchange reserves and called for improving Iran's rating in the country risk classifications.
The Organization for Economic Cooperation and Development (OECD) downgraded Iran's rating in the country risk classifications of the Participants to the Arrangement on Officially Supported Export Credits (CRE) from 5 to 6, following a meeting on June 26. The move came after Trump decided to walk away from the 2015 nuclear agreement.
The Berne Union is an international association of export credit and investment insurers. Its 83 members include government-backed export credit agencies, private credit and political risk insurers and multilateral agencies from 73 countries – representing all aspects of the industry.
Members collectively provide payment risk protection equivalent to approximately 13% of annual world trade compensating banks and exporters for losses suffered due to defaults by buyers or other obligors and providing flexible risk capacity to support international trade transactions.
