Despite all their efforts to imply nothing special is the case, officials are gradually leaking news about how bad things have grown in trade between Iranian and Chinese companies, especially in the field of petrochemicals. Both Iranian and Chinese officials have been shunning enquiries what is wrong with Chinese companies paying for petrochemicals they import from Iran.
By Mehdi Sepehrvand for PIMI Portal
“We have no problem exporting petrochemical products to China, the problem exists only in [China] paying for the exported products,” said Iran’s petrochemical chief in a self-contradictory statement on June 30, while trying not to admit that for months now the country is exporting petrochemicals to China without receiving any money in return.
“Things have gone to the point where top officials of the two countries are now engaged in talking the issue over,” Marzieh Shahdaei, head of the National Petrochemical Company said then. She did not suggest any improvement in the high-level talks, but went on to say that “maybe it is necessary for China to change some of its regulations.”
Mehdi Sharifi Niknafas, the head of Iran Petrochemical Commercial Company, in May said that China has adopted strict anti-money laundering policies that cause difficulties in transferring the money generated through Iran’s export of petrochemicals there.
According to the official, about 40 percent of Iran’s petrochemical exports go to China. The Middle Eastern nation’s total exports of petrochemicals over the last Iranian calendar year (ended March 20, 2017) amounted to 20.4 million tons. But on the part of China, the country’s ambassador to Tehran Pang Sen said on June 6 in answer to a reporter that he did not believe any big problem existed around Iran-China petrochemical trade. He did not comment on the actual measures the two sides were (or were not) taking to get passed this glitch, but resigned to stating generalities such as if there is any problem officials on both sides will make any effort to resolve it.
Now months into the lingering problem, an “informed source from the trade chamber” (no mention whether it is Tehran Chamber or Iran Chamber of commerce) told Iran Labor News Agency on August 9 that “the closure of three Iranian accounts with Chinese banks are related to anti-money laundering laws.” “Petrochemical companies are the real cause of the problem,” the news agency quoted the source has saying.
S/he further explained that “Some petrochemical companies used to send goods from Iran while their bills of loading were sent from Persian Gulf littoral states such as [the UAE] or Oman. Then, when they wanted to transfer the money to Iran, documents would show that the goods had been sent from Dubai for example, whereas the money should go to Iran. And this is against banking regulations.”
The Customs Administration of Iran kept its monthly reports confidential since the beginning of the current fiscal year (March) for a period of four months. This, many believe, had to do with the ongoing problem with China and declining petrochemical income, especially sensitive in view of the May presidential election. Iranian companies used to “circumvent” sanctions by using proxies while Iran was under harsh international boycott in the early 2010s. The sanctions were lifted in 2016 following Iran’s landmark nuclear deal with world powers.
Since then, Iran has started cooperation with the Financial Action Task Force to help authenticate its commitment to the nuclear deal and ease of access to global economic services. The FATF, an international anti-money-laundering standards body, said on June 30 that it would extend the suspension of some restrictions against Iran. Iran is still under close scrutiny by the FATF. The FATF last year granted Tehran 12 months to improve aspects of its anti-money-laundering program, saying Iran adopted and committed to an action plan to address some deficiencies.
Recent inquiries into Iranian petrochemical companies which continue to export to China reveal that they have opened currency exchange agencies in order to be able to receive their money from Chinese partners.
