News

    Western Sanctions on Iranian Banks Make Trade Harder

    A currency exchange bureau worker counts US dollars, as Iranian bank notes are seen at right with portrait of late revolutionary founder Ayatollah Khomeini, in downtown Tehran,  December 21, 2011.
    A currency exchange bureau worker counts US dollars, as Iranian bank notes are seen at right with portrait of late revolutionary founder Ayatollah Khomeini, in downtown Tehran, December 21, 2011.

    The European Union's expulsion of 30 sanctioned Iranian banks from a global financial messaging service last month has made it significantly harder for Iranians using those banks to do business with foreign partners.

    The head of the German-Iranian Chamber of Commerce in Hamburg, Michael Tockuss, said that hundreds of German exporters are owed $4.7 billion by Iranians who received goods before the EU move, but now cannot use their banks to pay for them.

    His comments reflect Western contentions that a variety of mostly U.S. and European sanctions relating to Iran's controversial nuclear program are having crippling effects on the Iranian economy.

    The Belgium-based organization SWIFT disconnected 30 Iranian banks from its network on March 17, on the orders of EU nations who sanctioned those banks for having links to Iran's nuclear program.  The United States also has sanctions against 23 Iranian banks.

    SWIFT is the world's dominant platform for cross-border financial transactions.  Without access to it, EU-sanctioned Iranian banks cannot send money abroad electronically on behalf of clients or themselves.

    Money transfers cut

    The SWIFT cut-off not only is blocking existing deals between Iranian and European companies, but also prevents them from making any new agreements to transfer money via the 30 Iranian banks.

    Several opportunities exist for Iranian businesses and their trade partners to continue legal transactions with each other.

    Tockuss said Iran has five or six banks that are not under EU sanctions.  Those banks remain connected to the SWIFT system and can be used by European companies exporting to Iranian markets.

    But using that method is not easy, because many European banks refuse to accept money from any Iranian lenders, even those not under sanctions.

    "This has nothing to do with the sanctions directly," said Tockuss. "It is a company decision to stop this business [with Iran]."

    Many European banks also lack established relationships with the non-sanctioned Iranian banks, which are private, relatively young and have only a small market share.

    Karim Pakravan, a finance professor at DePaul University of Chicago, said that any foreign banks opening accounts for Iran's small lenders are likely to limit their credit lines and charge them a premium for services.

    "Pretty much the only way that Iranian banks can execute foreign transactions now is by allowing [Iranians] to buy cash, put it in a case, fly on a plane to wherever they have to go, and hand over the cash for whatever transaction they have," he said.

    Cash transactions rise

    Tockuss of the German-Iranian Chamber of Commerce said cash handovers by Iranians to European businesses "definitely have increased."  But he said in most cases the payments do not exceed $60,000.

    "I have not seen any Iranians traveling in the world with half a million euros at the moment," he said.  "But smaller payments for spare parts or similar items are quite common."

    Another legal avenue for Iran to engage in financial transactions with the West is by importing goods and services exempted from Western sanctions.

    Items exempted by the Obama administration include food, medicine and communication equipment designed to help Iranians get better access to the Internet.

    Even with such exemptions, Tockuss said the tightening of EU and U.S. sanctions on Iran has created another casualty: "the average Iranian on the street."

    Tockuss said a German medical company that exports devices used by thousands of dialysis patients in Tehran recently had problems in finding a bank to handle Iranian payments.  He said the problems were eventually resolved.

    Wide impacts

    Pakravan of DePaul University said Western sanctions on Iran's banking sector have had other economic impacts.

    "Factories cannot find raw materials and spare parts, and have stopped operating," he said.  "The Iranian market also has been invaded by much cheaper Chinese goods and those will continue to undercut Iranian industry."

    Iranian Foreign Minister Ali Akbar Salehi has downplayed the sanctions.  In an interview with state news agency IRNA published on Monday, he called them "minor problems" and said "Iran is quite capable of defeating those pressures."

    The Iranian government gets most of its revenue from oil and has signed barter agreements with major buyers such as India, bypassing the need to use the SWIFT financial messaging service.

    Economist Intelligence Unit Middle East/North Africa editor Edward Bell, reached by phone in London, said the expulsion of Iranian banks from SWIFT "will not really affect Iran's oil sector much."

    But Iran's government could see its fortunes decline if U.S. lawmakers succeed in passing a bill threatening SWIFT with penalties unless it expels all Iranian banks.  "If that happens, anybody trying to do any trade with Iran is going to face a real difficulty," Bell said.

    Bell also said EU sanctions against Iran are likely to tighten even further.  "I think you will see a more coordinated and consistent EU policy on Iran as being more tough and similar to the United States," he said.

    Join the conversation on our social journalism site -
    Middle East Voices
    . Follow our Middle East reports on
    Twitter and discuss them on our Facebook page.

    Michael Lipin

    Michael covers international news for VOA on the web, radio and TV, specializing in the Middle East and East Asia Pacific. Follow him on Twitter @Michael_Lipin
    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Jacques
    April 08, 2012 12:31 PM
    I bet that with all those sanctions stemming from way back in 1979 it will not be hard for the president to convince himself that for the good of the Iran the Iranians to his knowledge have secretely contracted Israel to scuttle the reactor the NY times claims must be dimantled.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Valentine's Day Stinks for Lebanese Clownsi
    X
    February 09, 2016 8:04 PM
    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video Foreign Policy Weighs Heavy for Some US Voters

    VOA talks to protesters in Manchester, New Hampshire who sound off on foreign policy issues such as the Guantanamo Bay Prison, the Israeli-Palestinian conflict, Middle East Affairs and national security.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video New Hampshire Voters Are Independent, Mindful of History

    Once every four years, the northeastern state of New Hampshire becomes the center of the U.S. political universe with its first-in-the-nation presidential primary. What's unusual about New Hampshire is how seriously the voters take their role and the responsibility of being among the first to weigh in on the candidates.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Bhutanese Refugees in New Hampshire Closely Watching Primary Election

    They fled their country and lived in refugee camps in neighboring Nepal for decades before being resettled in the northeastern U.S. state of New Hampshire -- now the focus of the U.S. presidential contest. VOA correspondent Aru Pande spoke with members of the Bhutanese community, including new American citizens, about the campaign and the strong anti-immigrant rhetoric of some of the candidates.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.
    Video

    Video Genius Lets World Share Its Knowledge

    Inspired by crowdsourcing companies like Wikipedia, Genius allows anyone to edit anything on the web, using its web annotation tool
    Video

    Video In Philippines, Mixed Feelings About Greater US Military Presence

    In the Philippines, some who will be directly affected by a recent Supreme Court decision clearing the way for more United States troop visits are having mixed reactions.  The increased rotations come at a time when the Philippines is trying to build up its military in the face of growing maritime assertiveness from China.  From Bahile, Palawan on the coast of the South China Sea, Simone Orendain has this story.