U.S. Treasury Assures Brazilian Banks They Can Trade with Iran

The U.S. Treasury has assured Brazilian banks that they can finance trade with Iran without fear of U.S. sanctions. According to Reuters, which reported this on Wednesday, November 24, citing a Brazilian official, the Treasury's decision opens the way for billions of dollars in exports of aircraft, buses, and other equipment to Iran. Sanctions on non-American entities trading with Iranian companies were lifted last December, coinciding with the implementation of the Iran nuclear deal, but Brazilian banks remained concerned about potential U.S. penalties. Rodrigo Azeredo, a Brazilian Foreign Ministry trade official, stated that banks in the country were 'worried that American and European banks would block their lines of credit.' Reuters reports that this concern was alleviated by a meeting last week between U.S. Treasury officials and senior executives from major Brazilian banks in São Paulo, where it was assured that they could transact with Iranian banks in dollars or other currencies, as long as their financial operations do not enter the U.S. financial system and do not involve Iranian companies on the U.S. blacklist. The assurance from the U.S. Treasury's Office of Foreign Assets Control removes a significant financial barrier for Brazil, which aims to increase trade with Iran from $1.6 billion to $5 billion in the coming years. Azeredo noted, 'The U.S. government feels almost obligated to keep its partners updated on Iran sanctions information. They want to show that Iran can benefit from the nuclear deal.' Donald Trump, the U.S. president-elect, had threatened during his campaign to nullify the nuclear deal with Iran and reimpose sanctions on non-American entities trading with Iran. The update from the U.S. Treasury coincides with a visit by an Iranian delegation led by Ali Tayebnia, the Minister of Economic Affairs and Finance, to Brazil, seeking to enhance economic relations with the country. Brazilian company Embraer, the world's third-largest commercial aircraft manufacturer, is negotiating with Tehran to sell at least 20 E-195 aircraft worth $1 billion to modernize Iran's air fleet. This company still needs to obtain the necessary approvals from the U.S. for the sale of aircraft to Iran as it uses sensitive technology for its aircraft engines. An Embraer spokesperson expressed hope that the company would soon receive the necessary approvals, which Airbus recently obtained for selling aircraft to Iran from the U.S. Brazilian company Marcopolo S.A., a bus manufacturer, is also looking to sell hundreds of such vehicles to Iran. Azeredo stated that Iranian companies are seeking Brazilian products ranging from tractors to electric generators, hospital equipment, and dental supplies.