JOHANNESBURG – It’s been four months since most sanctions against Iran – including a ban on oil purchases – were lifted as a result of the Iran nuclear deal.
Iran is officially open for business again with most countries in the world, including South Africa.
But South African companies – like those elsewhere – are wary about returning.
Their main concern is that most primary US sanctions against Iran still remain in place. And those would affect dealings between other countries and Iran if the US system is involved, American official Helga Schmid who is the European External Action Service deputy secretary general for political affairs said in South Africa earlier this month.
Schmid was in the country mainly to lead regular meetings with South Africa’s international relations and co-operation department about the state of international relations. Schmid was also a key player in the nuclear negotiations between Iran and the so-called EU 3+3 group of countries (aka the P5 +1 group).
The European Union is also co-ordinating implementation of the nuclear deal, including the lifting of sanctions, through the joint commission.
And so Schmid briefed the South African government as well as representatives of the SA Reserve Bank, private banks, and energy companies about what business they could do and not do now in Iran.
“The US primary sanctions [trade embargo] remains in place, with three exceptions, which are civil aviation, some foodstuffs like pistachios and carpets, and activities of US foreign subsidiaries,” Schmid said.
“The difficulties now – and this is what I discussed with the business representatives – is that because the country has been isolated for some time, it needs time before they can rebuild the necessary confidence for business investors.
“But also Iran has to do some homework. They have to put in place the right regulatory framework, particularly on the banking side, adopt the necessary legislation on anti-money laundering and all that.”
And for those countries planning to return to oil business with Iran, the real issue now was financing that business.
“Because US primary sanctions remain in place, particularly major banks tend to be very cautious,” she said, because they were afraid of possible retaliation by US sanctions.
One of the potential pitfalls for foreign companies thinking about investing in Iran was that today most major banks and other companies were multinational. And if they had a US national on their boards and did business with Iran, that could be problematic under US sanctions.
US dollar transactions also remained tricky, but South African companies could deal in euros, she said.
Another hazard was that a few Iranian persons and entities, including banks, remained listed by the US because they were sponsoring terrorism. “Engaging with any of those banks could again trigger retaliation of sanctions by the US.”
Some experts have expressed concerns that the Iran nuclear deal could be scrapped by the next US president. The presumptive Republican Party nominee Donald Trump has already said he would tear up all international agreements signed by the Obama administration.
Source: Africa News Agency, 15 May 2016
