The Second Iranian Trade Conference was held in London last week. The conference focused on the U.K.’s growing trade with Iran and the continuing reluctance of the larger western banks to establish ties with Iran. The Iranian market and the challenges of conducting business in a post-sanctions environment were explored.
Among the speakers were Liam Fox, the Secretary of State for International Trade, Hamid Baeidinejad, Iranian Ambassador to the U.K., Lord Lamont of Lerwick, UK Trade Envoy to Iran, Sir Richard Dalton, President of The British-Iranian Chamber of Commerce, as well as several representatives from Iranian and European banks and industries.
Iran as a Significant Trading Partner for the U.K.
After the re-opening of the British Embassy in Tehran, Anglo-Iranian relations have improved and British companies are now slowly starting their business activities. There are clear signs of growth.
According to Mr. Fox, Iran has the potential to be a significant trading partner for the U.K. post-Brexit, and the government is encouraging British businesses to engage with Iran, notably in exports in the healthcare, water, retail, mining and aviation. Renewables are one of the most promising sectors. Several trade delegations have visited Iran and more specific sector-based visits are being planned, with a mining delegation visiting Tehran in December. The British government is also well-placed to provide financial advisory to Iran and help modernise Iran’s private banks.
The reluctance of large banks however, has impeded trade between Iran and European countries. Primary U.S. sanctions are still in place. The recent efforts by the U.S. Treasury to clarify the extent of current sanctions (please see our earlier blog on this subject), in order to promote international trade with Iran in dollars, while still respecting the primary sanctions on U.S. entities trading with Iran, have so far done little to encourage larger European banks. A recent one-year suspension of some restrictions with Iran by FATF (a global group of anti-money-laundering agencies) has also not had a significant positive effect.
As explained by Justine Walker of the BBA, all global banks have a large U.S. presence and in order to fully benefit from the lifting of sanctions while still complying with the residual sanctions, the banks will need to isolate their U.S. businesses before engaging with Iran. This requires a major change in their policies and will take time. Meanwhile, transactions will need to be approved on a case by case basis.
Resolving the financing issue is a top priority of the British government, according to Mr. Fox. The government is in talks with banks in order to resolve this issue and pave the way for financing larger deals which the smaller banks are unable to finance.
The outcome of the U.S. election was not the favoured one by the banks. Trump’s policy on Iran is still at best, unclear. He has indicated in the past that he will cancel the nuclear deal reached with Iran.
For further information on the practicalities of doing business in Iran please contact Jacqueline Faridani on firstname.lastname@example.org or 020 7947 5354
For further information on the law surrounding sanctions and Iran please contact Edward de la Billiere on email@example.com or 020 7947 5354
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