Zarif Wants U.S. to Reassure Banks on Doing Iran Business

  • Iranian foreign minister says past restrictions prevent trade
  • Plans to lobby John Kerry at meeting in New York on Tuesday

Iranian Foreign Minister Mohammad Javad Zarif said international banks remain wary of U.S. regulations and need “reassurances” that they can resume business with his nation even after its nuclear deal with world powers.

Zarif, speaking in New York ahead of a Tuesday meeting with U.S. Secretary of State John Kerry, said talks with his counterpart were necessary to follow up on the implementation of the agreement on the U.S. side.

The deal’s aim “was to not have the U.S. intervene in Iran’s relations with most other countries,” the Iranian Students’ News Agency cited Zarif as saying. “We should prevent past U.S. regulations from being obstacles to most financial institutions in Europe and Asia having banking relations with Iran.”

Iranian central bank Governor Valiollah Seif voiced similar sentiments last week, telling Bloomberg Television that the U.S. Treasury’s Office of Foreign Assets Control should issue guidelines encouraging European banks to be more receptive to Iran. Seif met Treasury Secretary Jack Lew on Thursday during the International Monetary Fund and World Bank meetings in Washington.

While the nuclear accord led to the lifting of some economic sanctions, including reconnecting Iranian banks to the SWIFT system for international financial transactions and allowing the country to increase oil exports, some U.S. restrictions remain in place. That forces companies seeking to work with Iran to navigate a complex set of regulations.

Asset Freeze

Iran has been unable to tap as much as $100 billion of its assets held abroad and has gotten “almost nothing” from the nuclear accord, which was implemented on Jan. 16, Seif said in the interview.

“One of the needs that we definitely have goes back to converting currencies to pay our suppliers,” he said. “It requires having access to the U.S. financial system.”

Iran has only received about $3 billion of previously frozen assets since the nuclear deal was reached in July, Agence France-Presse reported Kerry as saying at a dinner hosted by the pro-Israel J Street group.

The delay in establishing regular banking relations with major European banks could hold up deals, including Iran’s January agreement to buy 118 Airbus planes worth $27 billion. The Iranian government is also campaigning to resume business with multinationals to attract investment.

Removing Hurdles

A dozen European delegations have headed to Iran since the nuclear deal was concluded to explore opportunities and sign preliminary agreements. Italian Prime Minister Matteo Renzi was in Tehran last week at the head of a large trade delegation. He was followed within days by European Union foreign policy chief Federica Mogherini, who told the Tasnim news agency in Tehran that the bloc has been talking to the U.S. about removing hurdles impeding banks trying to work with Iran.

Normal banking relations are “absolutely essential,” said Esfandyar Batmanghelidj, organizer of the Europe-Iran Forum in May, which will bring together Iranians and European business leaders in Zurich to discuss issues such as the absence of financing.

President Hassan Rouhani’s administration “needs to show a reasonable momentum for sanctions relief and for economic growth in the country,” Batmanghelidj said in a phone interview. “The problem is the largest deals that have been signed at the level of a Memorandum of Understanding between Iranian and European partners require levels of financing that aren’t currently available. And that has to do with the fact that the larger banks that can do long-term project finance are not engaging Iran as of yet.”

Several European banks were fined for dealing with Iran when the country was under sanctions, with settlements including agreements not to deal with Tehran for a number of years. Iran wants the Office of Foreign Assets Control to rescind those deals.

French bank BNP Paribas SA agreed to pay $8.9 billion in July 2014 for violating U.S. sanctions against Sudan, Cuba and Iran. Germany’s Commerzbank AG agreed to pay $1.45 billion for moving funds through the U.S. financial system for Sudan and Iran.

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