U.S. Sanctions Still Hinder Iran's Foreign Transactions

More than two months have passed since the lifting of international sanctions against Iran, yet foreign banks remain hesitant to facilitate money transfers between Iran and foreign companies. As a result, the existing barriers to Iran's foreign transactions have not been removed, leading to dissatisfaction and frustration among Iranian investors and companies. According to Reuters, European banks, many of which were penalized in the past for violating U.S. sanctions in dealings with Iran, are still reluctant to engage with the country due to fears of potentially violating other U.S. sanctions against Iran. Ayatollah Ali Khamenei, the leader of the Islamic Republic, has accused the U.S. of delaying its commitments following the global powers' nuclear agreement with Iran. In his televised speech on Sunday, he stated, "The Americans have not fulfilled their promises and have only lifted sanctions on paper." He added that international currency transactions are facing difficulties due to "fear of America." On January 17, a significant portion of international sanctions related to Iran's nuclear activities, including penalties against foreign companies dealing with Tehran, were lifted by the U.S. government. The nuclear agreement last year had raised hopes that foreign investment pathways in Iran would quickly open up after the sanctions were lifted. However, currency transfers between Iran and foreign companies still face numerous challenges. American banks are still prohibited from dealing with Iran, and banks and financial institutions from other countries, which are not subject to this restriction, show hesitation in engaging with Iran. One of the main obstacles is the prohibition of dollar-denominated transactions originating from the U.S. financial system. Iran's financial and commercial sector believes that the U.S. government has not clearly defined which types of transactions are allowed and which are prohibited after the lifting of international sanctions. This ambiguity has led foreign banks to refuse to accept currency transfers related to transactions with Iran. Iranian traders and investors say that foreign companies have shown great interest in investing and trading with Iran in recent months, but the existing uncertainties in U.S. policy and foreign banks' concerns about legal violations have delayed these potential transactions. Reuters adds that the U.S. Treasury Department has yet to respond to this news agency's request for clarification on these issues. Iranian traders residing in Dubai, a key trading partner for Iran, still cannot obtain credit approvals from international banks to facilitate foreign transactions, and several of their accounts have been blocked in international banks in recent weeks. This situation will complicate the increase of oil exports and the release and transfer of about $100 billion of Iran's foreign currency that was blocked during the sanctions. Since mid-January and the lifting of nuclear sanctions, Iran has signed trade and investment contracts worth approximately $50 billion with countries such as Italy, Japan, South Korea, Russia, and Germany. The most significant of these deals is the contract for the purchase of 118 Airbus aircraft worth $27 billion. However, the necessary cash to implement these contracts cannot easily circulate in the international banking system. An Airbus executive stated last month during a conference in Paris, "Currently, banks are unwilling to cooperate with us on transactions with Iran." One of the main reasons for the reluctance of international banks, especially European banks, to engage with Iran is the heavy fines they faced in the past for violating U.S. sanctions against Iran. As long as the U.S. government considers banking transactions with Iran in dollars and originating from the U.S. financial system to be prohibited, the problem of currency transfers in transactions related to Iran will persist. In recent weeks, the global banking transfer network SWIFT has reconnected several Iranian banks to this network, allowing them to join the international banking currency transfer system after several years of disconnection. However, the results of this change have not been extensive, only paving the way for a limited number of banking transactions. Two informed sources in the international banking system stated that major world banks still do not accept checks from account holders in one of Iran's major commercial banks that have joined the SWIFT network. In this context, the Iranian government is trying to conduct most of its oil transactions in euros to reduce the limitations arising from dollar-denominated banking transactions.