LONDON/ANKARA: It should have been a routine delivery of vegetable oil to Iran for making margarine; instead the tanker spent months in the Gulf as banks held up payment for the cargo, fearing they would run foul of international sanctions.
The sanctions regime, imposed by the United States and European Union over Tehran’s nuclear programme, permits trade in humanitarian goods such as food and pharmaceuticals.
Yet many banks are steering clear of financing any deals with Iran due to a series of fines handed out by US authorities for dealing with sanctioned countries, including a recent $8.97 billion penalty for BNP Paribas of France.
So from January to March this year the Greek-run tanker lay at anchor before it was forced to head to Fujairah in the United Arab Emirates to refuel - this also being difficult in Iran due to the sanctions. Eventually, a sale of goods bill for the transaction came through and the tanker discharged its cargo in Iran, but only after months of wasted time and mounting costs.
“This was meant to have been entirely uneventful business,” the ship’s manager told Reuters, requesting that the name of the vessel and his company be withheld - for fear of attracting negative publicity for a shipment that was entirely legal.
Iranians blame such disruption of trade for soaring food prices at home and shortages of medicines for the sick such as cancer patients.
Western shipping sources, Iranian officials, and suppliers of foods and medicines told Reuters that increasing numbers of shipments destined for Iran are being held up or stopped.
“The banking side is the core problem. We are seeing banks dropping out of providing this type of transaction or ceasing to process them. It is complicated and the costs are high for such trades. It looks like it will get harder to do this business,” one US exporter of humanitarian goods to Iran said.
US officials said Washington was aware of the problems and taking steps to make humanitarian trade easier.
In May, trade sources and Iranian officials said hundreds of thousands of tonnes of grain and sugar were stuck in transit due to payment problems. The following month, Reuters reported that Iran was lobbying to get HSBC to process humanitarian trade transactions after Europe’s biggest bank froze some financing because of concerns about potential breaches of international sanctions.
“International and even regional banks are hesitant to interact with Iran. We have been trying to find replacements for those banks but have not been very lucky,” an official with Iran’s central bank said.
Trade sources say at least 500,000 tonnes of wheat is currently held up due to payment problems. Iranian government officials separately confirmed there was a large backlog.
Despite diplomatic talks with world powers over Tehran’s disputed nuclear programme, banking problems continue, the official and other sources said.
The fines on banks in the past two years have made many fear US regulators. Apart from the BNP Paribas penalty for breaches including trade with Iran, Germany’s Commerzbank AG is expected to pay $600 million to $800 million to resolve investigations into its dealings with Iran and other countries under US sanctions.
US authorities are also investigating others including Italy’s UniCredit and Germany’s Deutsche Bank . In 2012, HSBC was fined $1.92 billion by US regulators for various violations including doing business with Iran and money laundering in Mexico. Separately in 2012, New York regulators threatened to revoke Standard Chartered’s banking licence after it broke sanctions on Iran.
Sanctions were first imposed in 2006 over the nuclear programme which Tehran says is peaceful but the West fears could be used to make weapons.
“Humanitarian aid is not targeted, but the different aspects of sanctions have made it very difficult for Iran to import food and medicine,” a senior Iranian government official said. “It allows smuggling networks to get rich.”
A former US official said: “Financial institutions are seeing the business, even though it is permissible, as too risky from an anti-money laundering perspective and not profitable enough to outweigh the potential penalties and the additional compliance costs.”
NEW YORK – The living conditions of nearly 2 million Palestinians residing in the Gaza Strip ...