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Thursday, November 15, 2007

Bank Sanctions Impact Iran (Kuwait News)

Published Date: November 05, 2007 TEHRAN:

The Iranian economy is starting to feel the sting from a raft of banking sanctions
applied by the United States to pressure Tehran over its controversial nuclear drive.

Washington has blacklisted Iran's three main banks and has also successfully encouraged
virtually all major European banks into cutting business with the Islamic republic.

  • "Practically all the major European banks have ceased their cooperation with Iran," said an official from Iran's Export Development Bank, who asked
    not to be named.
  • It is no longer possible to wire money by dollar into Iran and for the payments in euros there are just three European banks. They could stop cooperating with us at any moment," said the official.
  • British-Asian bank HSBC and the Swiss giants UBS and Credit Suisse were the first to
    cut business with Iran back in 2006 while Deutsche Bank, Commerzbank and BNP Paribas
    have followed suit this year.

Meanwhile, Washington has blacklisted Iranian banks Melli, Mellat and Saderat, accusing
them of acting as a conduit for "terrorist financing" - something the banks vehemently deny.

The decision has effectively cut the Iranian banks off from the dollar-based financial system
and turned them into pariah institutions with whom their foreign counterparts are unwilling to

But it acknowledged the measures would be felt by ordinary Iranians: "It may inflict harm on
the lives of ordinary people using services." The moves against Iran's financial system have
been in parallel to two sets of UN sanctions against its ballistic missile and nuclear

  • But it is the unilateral US actions that are being felt most keenly in Iran. In
    essence, the sanctions aim at cutting off Iran's financial lifeblood. Foreign banks, who were already refusing to accept letters of credit issued by their Iranian counterparts, are now refusing to carry out even simple operations of money transfers to Iran.

"We wanted to import equipment to construct prefabricated houses but the Australian banks
refused to accept letters of credit," said Touraj, an Iranian businessman who preferred not to
give his surname.

Even Asian banks from countries that still have close economic links with Iran - such as South
sanctions stinging in Iran »

Korea and China - have been imposing restrictions on business with the Islamic republic. "The
big banks from China, one of Iran's most important partners, are now refusing to deal with
Iran as they have important interests in the United States and fear reprisals," said Mehrdad
a leading currency dealer.

Even banks on the Arabian peninsula - notably US ally the United Arab Emirates, Iran's
number one trading partner - may not be prepared to deal with the Islamic republic forever.

"Iranian banks can still use the services of small Asian banks or the Persian Gulf but that will
not last forever," said Bijan Khajepour, director of Atieh Consulting in Tehran.

"Firms are increasingly having to pay in cash or go through a third country to import their goods which will make the finished product even more expensive," he added.

The Rest @ Kuwait Times

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