small banks that don’t do any business in the United States and therefore couldn’t care less about US sanctions—but those small banks are making sure they charge the Islamic Republic through the nose for their services.
The Wall Street Journal reported Monday said that most such banks are charging Iran 6 percent above and beyond all the normal transaction fees. That often triples the transaction cost, the newspaper said. It says this Iran business has proven very lucrative for these banks.
The Journal identified a trio of banks helping the Islamic Republic: First Czech-Russian Bank, located in Russia; Bank of Kunlun, located in China; and the Swiss subsidiary of India’s Hinduja Bank, located in Geneva.
Most banks have ceased dealing with Iran even where it is legal to do so. An Arab official working on Iran issues told the Journal, “Legal or illegal, it doesn’t matter. It’s now political. Nobody wants a headache. And Iranian business is now a headache.”
Since 2005, the US Treasury has adopted policies and pressures intended to do just that—make it so unpleasant and worrisome to do business with Iran that banks will just shut Iran out. The Treasury keeps asking questions and nit-picking, making bankers who do business with Iran sweat and worry. The bottom line for most bankers is that Iran is just a small business market, while the United States is big and important. The fear of having their business with the United States cut off has prompted most banks to walk away from Iranian business.
Most Iranian banks are already sanctioned by the United States and Europe. But a few are not and The Wall Street Journal said three of them have stepped in to replace the larger Iranian banks under sanctions. The newspaper named those three banks as Saman, Karafarin and Pasargad. All are private. Most people expect them to be sanctioned soon.
Medical and food sales are exempt from sanctions on trade even by the United States. But the banking restrictions interfere even with medical and food sales. The Journal quoted an official of a German financial firm as saying that some German medical equipment firms have canceled sales to Iran because they haven’t been able to find German banks willing to deal with Iran, even though their sales don’t pose any problem with the US Treasury.
