Winners and losers in the Iranian nuclear deal
Iran has been the frequent destination of visits paid by numerous Western and Eastern business delegations since a year ago when the world realized Iran and the group P5+1 (the US, UK, France, Russia, China, and Germany) had settled for a deal that would end their dispute over the Islamic Republic’s nuclear program and lift economic sanctions on Tehran.
Iran has been since looking like a new world just discovered by international companies which ever strive to find new markets for their goods and services.
But all these comings and goings will have a real tangible result if and only if the companies would be sure that they would be able to be paid for their goods and services. Only then would they sign contracts with Iranian partners and start business in the country that has been kept isolated for years and now looks so lush a land where to sow one dollar and reap one hundred.
Yet, foreign banks wary of heavy US penalties are reluctant to restore ties with Iran even if sanctions are lifted in a possible nuclear deal. And that means a cut in the chain that has to connect Iranian and foreign companies and facilitate their business. Without banking relations, no company would consider vying for any activity in Iran.
About a dozen international banks, mostly European, have been stung by US penalties for sanctions-busting totaling nearly $14 billion since 2009, raising industry fears that the risk of engaging Iran would overshadow any gain.
Banks recently hit by penalties include BNP Paribas and Commerzbank while several others including Deutsche Bank, Societe Generale and Credit Agricole are under investigation, according to people familiar with the matter. BNP Paribas had to forfeit $8.9 billion (5.6 billion pounds).
Most people, including Iranians, thought with the implementation of the nuclear deal (called officially the Joint Comprehensive Plan of Action), the entire problem will be solved and all would be ok.
But, the deal removed only nuclear-related sanctions on Iran. Four months after the deal’s Implementation Day of January 16, people have begun to realize that another big hurdle still stands in the middle of the road: the so-called primary US sanctions that restrict the use of the dollar in business with Iran.
The primary sanctions were imposed on Iran in 1979 over the siege of the US embassy in Tehran. The ban says not only cannot the dollar be used for transaction in business with Iran, but the dollar cannot even be used to rate other currencies in order to pay or get paid for goods or services exchanged with Iran in any other currency.
This creates much delay in transactions and brings so much cost that is a big discouragement.
But, the large number of governmental and business delegations that have visited Iran cannot all be for nothing.
In the meantime, it has been American companies that have not approached Iran one inch. Not that they aren’t willing to do so- who wouldn’t be? The matter is they are restricted. This comes against the fact that the American government took the harshest toils in making the nuclear deal with Iran.
This inability at least to try seek relations with Iran has created some obvious rage in American companies.
The same is true about the UK and Italy who have scarcely south any opportunity.
But as for, say, China, it has been quite different. China had no problem with having relations with Iran from the start and neither does it now. China has even been the one true winner of anti-Iranian sanctions to turn into the Islamic Republic’s number one trade partner in the absence of Western companies.
France and Germany, for sure at least in the polymer sector as we are more aware of, learned ways from Iranians to bypass sanctions and sold Iran many machines during the sanctions years.
Russia, needless to say, has been and is dearly regarded by Iran. The country was in good terms with Iran under sanctions, and now it is the same even more, for the efforts it made to bring the deal home.
Less than one week after the JCPOA was finalized on July 14, 2015, Germany dispatched the first major European delegation to Iran, headed by Vice Chancellor and Minister of Economic Affairs and Energy Sigmar Gabriel.
Numerous other visits have been exchanged, including from Iran, President Hassan Rouhani’s trip to France and Italy in early 2016, which included signing numerous documents.
Not only that, East Asian countries have also been exploring the Iranian market for opportunities, including last week’s South Korean delegation visit which was headed by President Park Geun-hye.
All these put together, although the problem of the dollar exists and banks are not yet fully encouraged to start relations with Iran, things look at least brighter than a few months ago. The SWIFT banking facility is now available in Iran. Iranian companies are very willing to start business with foreign partners. And the government is doing what it can to ease the circumstances. Furthermore, the urge among various countries, including Western countries, to start business with Iran is obvious.
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This Editorial has been written by Mehdi Sepahvand a new colleague and an expert in English Language and a Professional to Journalism.
