Austrian Oberbank Halts Activities in Iran Due to Fears of New Sanctions

Austrian bank Oberbank, which became the first European bank to enter Iran's financial system in 2015, announced this week that it has ceased cooperation with Iran due to the intensification of U.S. sanctions. The Austrian newspaper 'Die Presse' reported in its latest issue that Oberbank reached a financial agreement with Iran in September as the first Western financial institution, but the current U.S. administration has posed 'severe obstacles' to banking business with Iran, leading to the halt of the company's projects in Iran. The newspaper discussed Oberbank's financial status, stating that the bank is in good condition, with only its business in Iran facing obstacles. According to Oberbank officials, the projects for which the company intended to open credit lines in Iran included 'infrastructure projects such as railways, hydropower plants, clean energy projects, health and wellness projects, and ultimately engineering projects,' the latter primarily aimed at job creation in Iran. U.S. President Donald Trump is expected to decide on the extension of the suspension of sanctions against Iran by May 11. This decision will impact U.S. requests to Europe regarding changes in the level of sanctions against Iran. Oberbank is Austria's seventh-largest bank, and according to the Jerusalem Post, Franz Gasslberger, the bank's president, stated that Oberbank will closely monitor the intensity of potential secondary sanctions against Iran. Trump announced in January that the European Union's deadline to address what the U.S. considers 'catastrophic flaws' in the nuclear deal (JCPOA) ends on May 11. Oberbank officials met with representatives of the Central Bank of Iran and the Iranian Ministry of Finance in September 2017, reaching a significant agreement that allows Austrian companies to implement their projects in Iran. Reuters reported last year that this meeting, held in Linz, Austria, is expected to last for over two years. At that time, the Central Bank of Iran announced that the first contract for opening a banking credit line (LC) with Oberbank was signed for one billion euros, and the second financing contract with Danske Bank of Denmark was signed for 500 million euros. According to the Islamic Republic's Central Bank website, this was the first time after the JCPOA that European banks signed banking credit line contracts with Iran. The official website of the Central Bank of Iran reported that Oberbank's contract was signed with 14 Iranian banks, and Danske Bank's contract was signed with 10 Iranian banks. The Iranian Industry and Mine Bank, which has contracts with both banks, stated on its official website that 'Oberbank finances 85% of the value of goods and services provided by Austrian sellers to Iranian buyers.' After the lifting of sanctions related to the nuclear program under the Iran nuclear agreement with world powers known as the JCPOA, bilateral trade between Iran and Europe increased, but with new pressures from the U.S. government, this trade has faced new obstacles.