LONDON/ANKARA (Reuters) – Despite a diplomatic thaw, Western banks are steering clear of attempts by Iran to get them involved in financing humanitarian transactions, fearing they could be penalized under U.S. sanctions, bankers and government officials told Reuters.
Iran was never barred from buying food or other humanitarian goods under sanctions imposed because of its nuclear program, but measures by the European Union and the United States have made trade generally more difficult over the past two years by hindering payments and shipping.
As part of talks in Geneva over the nuclear question, Tehran is pressing world powers to speed up trade finance arrangements on humanitarian deals involving both Western and Iranian banks, according to an Iranian government document seen by Reuters and sources familiar with the initiative.
Iranian government officials and international trade sources say Tehran wants to simplify complex trade finance arrangements potentially worth billions of dollars, which would alleviate pressure on the country’s sanctioned banking system.
According to a joint plan of action agreed in November in Geneva, world powers would “establish a financial channel to facilitate humanitarian trade for Iran’s domestic needs using Iranian oil revenues held abroad”.
“This channel would involve specified foreign banks and non-designated Iranian banks to be defined when establishing the channel,” the action plan said.
“We have been informed that according to the negotiations and agreements done in Geneva, the possibility to exchange direct LCs (letters of credit) between seven European banks and eight Iranian banks for food, medication and humanitarian goods has been provided,” the Iranian government document seen by Reuters says, although it made clear this was not final.
“Please note, that we can accept no legal liability regarding this information as it remains to be officially confirmed by the responsible authorities.”
The U.S. Treasury and EU officials declined to comment.
But a U.S. official told Reuters that Washington had been talking with some banks.
“Some banks are willing to play a part here, but not all of them. There are a lot of big banks that have been subject to fines for engaging in transactions that were in violation of U.S. sanctions that aren’t willing to do anything – even humanitarian,” the official said.
“They just are not willing to do business with Iran. And we are not in a position to say, you have to.”
Iran and Western governments reached an interim agreement in November last year over Tehran’s nuclear program in exchange for limited sanctions relief for six months.