Reuters: Food Companies Halt Trade with Iran Due to Sanctions

According to sources familiar with international trade and Iranian officials, international trading companies including Cargill and Bunge have halted food transactions with Iran due to the severance of necessary banking relations for ensuring payments under U.S. sanctions. Food and medicine are not subject to U.S. sanctions, but the resumption of the second wave of U.S. sanctions, primarily targeting the oil, shipping, and banking industries, has led many international banks to avoid participating in transactions with Iran, even regarding food. Many smaller banks that previously collaborated with Iran during the last round of sanctions have also ceased any transactions with the country this time. An informed European source, who requested anonymity, stated, "Within the framework of existing financial mechanisms, there is no guarantee for payments, and many international trading companies cannot transact with Iran under current conditions." Iranian and American trade sources also indicated that American companies Cargill and Bunge, along with Singaporean company Olam, are among those unable to finalize new transactions for exporting wheat, corn, raw sugar, and other food products to Iran due to the lack of cooperation from Western banks for transferring money to Iran. None of these companies responded to Reuters' inquiries. Iran, which heavily relies on imports for its food needs, has extensive experience in circumventing U.S. and Western sanctions. During the previous sanctions period from 2012 to 2016, Iran utilized a limited number of small foreign banks to conduct foreign transactions, particularly for food imports. However, many of those banking channels have been blocked in the recent sanctions enforcement. Three Iranian officials told Reuters that the main reason for the halt in food and other goods transactions is the lack of cooperation from banks with Iran. An official from Iran's Ministry of Industries, Mines, and Trade stated that only a very few small European banks, which have no relationship with the U.S. financial market, are still cooperating with Iran, and only in small purchases and transactions. He added, "We are in discussions to expand this banking and financial network with Europeans. But currently, many companies, including Cargill and Bunge, have informed us that they are forced to halt transactions with Iran due to banking obstacles." Swiss bank BCP, one of the banks that had previously been active in humanitarian goods transactions with Iran, announced in May this year that it would stop all new transactions with Iran. The U.S. government blacklisted the Iran and Europe Commercial Bank, headquartered in Germany, in November. This bank was one of the few financial institutions that had cooperated with Iran to a limited extent during the last sanctions period. Several Western banks that resumed cooperation with Iran after the nuclear agreement with the international community and the lifting of sanctions in 2016, including Austrian bank Oberbank, Danish bank Danske, and German bank DZ, have halted transactions with Iran in recent months. Belgian bank KBC also announced in June that it would limit transactions with Iran to humanitarian trade. Dutch bank ABN AMRO stated that it continues to provide banking services to Iran for transactions related to food, medical, and agricultural matters in a limited manner and with specific clients, but "the imposition of new restrictions on Iran's banking system is a serious challenge."