Iran’s central bank, under siege from the U.S and European Union, which froze its assets in January, can keep doing business in Switzerland because of its systemic importance to the Persian Gulf nation’s economy, said a spokesman for the Swiss Federal Department of Foreign Affairs.
Switzerland will also leave the door open to Iranian oil imports, the spokesman, Rudolf Christen, said today after the government expanded sanctions and froze accounts of eight additional Iranian companies and three people.
“The Swiss decision now to allow transactions by the Iranian Central Bank undermines the U.S.-driven financial sanctions,” Hague-based Heinrich Matthee, who advises governments and companies on risks in the Strait of Hormuz, said by telephone. “Swiss-based actors will benefit from the decision.”
World powers ended a 15-month stalemate last week with Iran when they met over the country’s atomic program in Istanbul. China, France, Germany, Russia, the U.K. and the U.S. are scheduled to meet Iran again on May 23 in Baghdad. European nations are set to boycott Iranian oil starting July 1 to pressure the country over its alleged nuclear-weapons program. Iran says its nuclear work is peaceful.
Tighter restrictions will “depend on further developments and how things unfold,” Christen said by telephone from the Swiss capital Bern. “We do not exclude that the Federal Council will strengthen the sanctions against Iran.”
The Society for Worldwide Interbank Financial Telecommunication, the dominant messaging service for international financial transactions, halted service on March 15 for more than 20 Iranian lenders including the central bank.
Switzerland’s decision is important for Iran because it “allows space in the financial system for the payment of transactions,” Matthee said. Switzerland-based companies including Glencore International AG, Gunvor International BV, Vitol SA, Trafigura AG and Mercuria Energy Trading SA, which together broker about one-third of the world’s oil deals, may eschew Iranian business to avoid U.S. condemnation, he said.
“Considerable U.S. pressure on Switzerland on this issue is likely,” Matthee said. “Such pressure, perhaps combined with some incentives, is likely to change the Swiss decision at some stage.”
Sanctions aimed at Iran’s central bank have forced Tehran’s government to barter oil for food and consumer products. The value of Iran’s rial has fallen and deprived the country of hard currencies that help fund imports needed for its nuclear and missile programs.
“On the day that the nations of the world will be able to say that through common effort, they have overcome the severe crisis of Iran’s nuclear program, Switzerland will not be among them,” Israeli Foreign Ministry spokesman Yigal Palmor said in a telephone interview from Jerusalem.