U.S. Secretary of State John Kerry told Europe’s top banks they have nothing to fear from resuming business with Iran, as long as they make proper checks on trade partners and pursue “legitimate business”.
European banks, some of which have been punished for breaking sanctions imposed on Iran, are sceptical it is now safe for them to restore trade ties with the country and have largely held back since the lifting of some restrictions in January.
“We want to make it clear that legitimate business, which is clear under the definition of the agreement, is available to banks,” Kerry said on Thursday during what is likely to be his last trip to London before November’s U.S. election.
About 10 executives from leading European banks took part in the meeting, along with British Foreign Secretary Philip Hammond, secretary of state for business Sajid Javid and Norman Lamont, trade envoy to Iran, a British official told Reuters.
British banks including Barclays, HSBC and Standard Chartered as well as some from other European countries attended, sources familiar with the matter said.
The United States and Europe lifted sanctions in January under a deal with Iran to limit its nuclear programme, but other U.S. sanctions remain, including a ban on Iran-linked transactions in dollars being processed through the U.S. financial system.
That has left Europe’s banks nervous of resuming trade despite encouraging words from the U.S., after lenders including BNP Paribas and Standard Chartered paid out billions of dollars in fines to resolve allegations of past sanctions-busting.
Standard Chartered said after the meeting: “Will not accept any new clients who reside in Iran, or which are an entity owned or controlled by a person there, nor will we undertake any new transactions involving Iran or any party in Iran”.
Bridging the gap
Hammond said the strategic objective was to draw Iran back into the international community, and this meant overcoming “the reality of what the European banks are finding in practice”.
“We’re trying to bridge that gap…to allow these European and global banks to support European businesses in resuming normal trade and investment patterns with Iran,” Hammond said.
Banks’ fears are exacerbated by the differing tone of rhetoric between federal U.S. officials and State laws, many of which still ban pension groups and funds from investing in overseas companies that do business in Iran, Tom Stocker, a Pinsent Masons lawyer with expertise in trade sanctions, said.
“It is all well and good for Kerry to give warm rhetoric but it needs to be backed with a clear general license issued by the U.S. authorities to conduct trade in Iran,” Stocker said.
Ayatollah Ali Khamenei, the most powerful figure in Iran, has also blamed delays in the resumption of trade squarely on the United States.
“The U.S. Treasury … acts in such a way that big corporations, big institutions and big banks do not dare to come and deal with Iran,” Khamenei said in March.
European banks fear that legal business could be retroactively made illegal if sanctions were to be re-imposed.