Iran's central bank governor, in a rare visit to Washington,
demanded the Obama administration take more steps to facilitate his
country's banking transactions world-wide and warned the landmark
nuclear agreement reached last year could be at risk if the U.S.
doesn't act.
Iranian banks have been unable to process international money
transfers and finance trade freely in the months since the deal
went into effect in January. Iran also has faced obstacles in
repatriating tens of billions of dollars of its oil revenues that
were frozen in overseas accounts under U.S. sanctions. Some Western
banks have acknowledged avoiding dealings with Iran due to fears of
crossing the U.S. Treasury.
The troubles have jeopardized the big economic dividend the
government hoped to secure from the nuclear deal Iran and six world
powers struck last July, and underscored the West's lingering
suspicion toward Tehran.
Iran agreed to scale back its nuclear program in exchange for
relief from international sanctions that hurt its economy.
"They need to do whatever is needed to honor their commitments,"
Iran's central bank governor Valiollah Seif said during a 90-minute
presentation that came on the sidelines of the International
Monetary Fund and World Bank spring meetings in Washington on
Friday. "Otherwise, the [Iran nuclear deal] breaks up under its own
terms," he said.
Mr. Seif's comments came a day after a face-to-face meeting with
U.S. Treasury Secretary Jacob Lew that was largely focused on
Iranian demands for more sanctions relief in the wake of the
landmark nuclear accord, according to Iranian and U.S.
officials.
The U.S. and other world powers agreed to lift most sanctions on
Iran as part of the deal. But the Treasury still bars Iran from
using the U.S. financial system or the American dollar.
In recent weeks, the Obama administration has been having
internal deliberations about facilitating Iran trade according to
U.S. officials. This has included finding ways to allow Iran to
conduct dollarized trade without directly accessing the U.S.
financial system. Tehran's ability to repatriate its oil revenues
is seen as limited without any ability to access dollars.
Iran's chief banker specifically said Iranian businesses should
be allowed to conduct U.S. dollar transactions and be allowed into
the American financial system. "We want both sides of this
agreement, especially the U.S., to take the required measures to
remove the obstacles," Mr. Seif said.
The White House, asked Friday about the Iranian official's
comments, said the U.S. is abiding by the nuclear agreement, known
as the Joint Comprehensive Plan of Action.
"The United States is fulfilling our commitments to the JCPOA,
consistent with the letter and spirit of that agreement," said Josh
Earnest, the White House spokesman.
He said Iran has lived up to commitments to reduce its nuclear
stockpile, take centrifuges out of operation and to take other
steps. "And as a result, the United States, along with the rest of
the international community is committed to living up to our end of
the bargain," he said.
The Iranian's appearance stoked an already heated debate in
Washington about the future of U.S.-Iranian relations and the
amount of sanctions relief that should be afforded Tehran.
Some Republicans criticized the White House for allowing Mr.
Seif to visit Washington, noting that he had run Iranian banks that
previously were sanctioned for facilitating Iran's nuclear program
and allegedly supporting international terrorist groups.
Iran's continued problems accessing the financial system—which
severely limits the ability of Iranian banks to move money freely
around the world—are one example of how sanctions-era distrust has
eroded Iranian hopes for a quick economic boost from a deal that
signaled the country's rapprochement with the West.
A high-ranking Iranian banker who asked not to be named said
large international banks had even begun warning other lenders that
they would face additional scrutiny if they did any deals
there.
"They are threatening them, saying that it's going to take a bit
longer to do things, to clear the accounts or to record the
transactions, and because of that banks are getting nervous," the
banker said.
The wariness toward Iran threatens to stymie the nation's trade
worth tens of billions of dollars annually. Banks play an important
role in larger import and export deals by ensuring payments are
made for goods once their delivery is verified.
Iran exported $48.9 billion worth of goods and services in 2013,
according to United Nations figures, mostly crude oil it sent to
Asia. It imported about the same amount.
Western officials downplay the idea that the U.S. is trying to
discourage dealings with Iran. Chris Backemeyer, a top sanctions
policy official at the State Department, said a post-sanctions
boost in trade was to be expected, and that the U.S. didn't have
anything against it.
Still, significant U.S. sanctions are still in place over the
country's human rights record.
Adam Szubin, the Treasury's acting undersecretary, said
Wednesday that it was up to Iran to create a welcoming business
environment and that the nuclear deal was "an international
arrangement, not a cashier's check."
Javad Zarif, Iran's foreign minister, called in February for the
U.S. to declare explicitly that banks could do business with Iran
without fear. Not doing so would amount to a problem in the
implementation of the deal, he said.
In the absence of such a statement, many banks are staying on
the sidelines even as Iran's financial institutions get reconnected
to the Belgium-based SWIFT interbank messaging service.
So far, the EU has helped 33 Iranian banks get back on SWIFT, a
secure messaging network that is essential for processing money
transfers.
But the big banks haven't shaken the stigma of large fines doled
out during the sanctions era. BNP Paribas, UBS and HSBC were among
several banks that in the past have paid more than $1 billion to
settle U.S. claims that they violated sanctions against Iran and
other countries.
Mostafa Rouy, a board member and head of international affairs
at the Tehran-based Bank Pasargad, said he attempted to make two
international bank transfers after the implementation of the
nuclear deal in January. He tried to move funds between the bank's
own accounts with correspondent institutions not subject to U.S.
restrictions, but was denied both times.
He was told the sending bank had a separate euro clearing
account and didn't want to jeopardize its relationships by having
Iranian connections, he said.
"They said, 'sorry, we are still considering our internal
policies in order to make sure everything is in order,' " he
said.
European officials say Iranian complaints about access to the
global banking system are overblown.
None of the banking cases Iranian officials have brought to the
attention of European counterparts showed any breach of the nuclear
deal by the U.S., one official said. Iranian moves to combat
money-laundering and terrorism financing hadn't been sufficient to
allay European authorities' concerns about a wholesale reconnection
of its banks to the global financial system, the official
added.
Laurence Norman in Brussels contributed to this article.
Write to Jay Solomon at jay.solomon@wsj.com, Asa Fitch at
asa.fitch@wsj.com and Benoit Faucon at benoit.faucon@wsj.com
(END) Dow Jones Newswires
April 15, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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