News ID: 153389
Published: 0729 GMT June 17, 2016

Iran's return to global market faster than expected

Iran's return to global market faster than expected

The landmark nuclear deal with world powers is paying off as the Iran clinches economic deals with foreign companies on daily basis.

Removal of anti-Iran sanctions following the last year nuclear agreement has prompted many countries not to hesitate to boost their economic relations with Tehran.

Central Bank of Iran (CBI) says some 200 foreign banks have so far forged business ties with Iran since the implementation of the lasting nuclear deal.

“Two hundred small and medium-sized international banks have started correspondent relationships with Iranian banks,” CBI said in an emailed response to questions by Reuters.

It further said that Iranian banks are now opening accounts and letters of credit with foreign banks and conducting “currency transfers in the form of issuing payment orders for foreign exchange services and imports”.

Main banking relationships had been formed with institutions in Asia and Europe, and to a lesser extent in the Americas and Africa, including Germany-based Europaeisch-Iranische Handelsbank AG (EIH) and two Italian lenders, Mediobanca and Banca Popolare di Sondrio, the report added.

However, some major European banks are still tentative to re-engage with Iranian financial entities despite the nuclear deal.

The banks’ conservatism and wait-and-see approach comes from the fear they could face US legal action if they move to reestablish links with Iran, which will make them the losers in the game of the first come first.


Tehran-Moscow trade level


On the sidelines of an international forum in the Russian city of St. Petersburg, officials from Iran and Russia, two major partners in the region, discussed ways to enhance trade levels between the two countries. 

Addressing the St. Petersburg International Economic Forum (SPIEF) on Thursday, Iran’s ambassador to Moscow Mahdi Sanai called for efforts to enhance economic relations with Russia proportional to their political interaction.

Trade between Iran and Russia does not match the level of their political relations and needs to be improved, Mahdi Sanai said.

"We develop serious relations at all levels and in all spheres. The Russian-Iranian relations have strategic nature," Tass quoted him as saying.

The trade relations between the two countries lag behind the high level of political dialogue, he noted, adding, "We need to work hard to upgrade our trade relations."

Back in November 2015, Russia’s Deputy Prime Minister Dmitry Rogozin said Tehran and Moscow are resolved to increase the volume of their trade by $3-4 billion over the next 3 years.

Russian Energy Ministry Alexander Novak also said on Thursday the two countries might soon implement projects for $40 billion.

“Currently the total volume of the projects is about $40 billion. This is the minimum level of potential projects that could be implemented in the near future," the minister said, reported TASS.

According to Novak, two large contracts are already prepared with Iran totaling $2.5 billion, and sources of funding by lending by the Iranian side have been found.

"These are the contracts related to two thermal power plants, four blocks of 350 megawatts in terms of the development of electric power industry of Iran, as well as reconstruction of the railway line," he said.

On Friday, President Vladimir Putin said it makes sense to form a broader Eurasian partnership on the basis of the Eurasian Economic Union (EAEU) that would involve China, India, Pakistan, Iran and a number of CIS countries.

"We suggest thinking about formation of a great Eurasian partnership with the participation of the EAEU as well as countries with which we have already formed close relations: China, India, Pakistan, Iran and of course, we have in view our partners in the CIS, other interested states and unions," Putin said at the forum.



US measures


And in the US, the main negotiator during the nuclear talks, the chief agency in charge of implementing sanctions has added staff to help speed up processing applications from businesses hoping to trade with Iran, a Treasury official said on Thursday, Reuters reported.

The beefing up of the US Treasury's Office of Foreign Assets Control comes as businesses and lawyers say that often the answers they receive from the agency on whether certain trade is allowed in Iran is vague, non-committal and too slow to facilitate fast-moving business decisions.

Iranian officials have also complained that the country is not bearing the full economic fruits of the deal, and have urged the United States to do more to clarify the sanctions relief and to encourage commercial business deals.

The United States removed nuclear-related sanctions on Iran in January as part of a landmark deal. But some US sanctions on Iran remain, including a prohibition on US citizens and businesses dealing with the country.

OFAC's acting director, John Smith, said that since the nuclear deal, the agency has received "hundreds if not into the thousands by this point" of applications from businesses seeking licenses to do trade in Iran. Each of those licenses must be assessed by OFAC staff in accordance with complex and overlapping regulations.

"We are stretched to the limit," Smith said, speaking at a forum in Washington, D.C. "We have beefed up our licensing division in substantial ways. We've added more licensing officers. We've just created a new licensing chief to help get licenses out faster."

He did not specify how many new staff, and over what time period, the agency has added.

OFAC staffing levels have stayed relatively consistent at about 170 to 200 people for the last five years or so, former officials say. 

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