Analysts say US sanctions affecting Iran's economy

By
May 24, 2007 13:26

Businessmen say they prefer facing a loss in the the Iranian market than having the US realize threats to cut off ties with companies doing business there.

3 minute read.



jpost services and tools

jp.services1. (photo credit: )

US sanctions against Iran have caused damage to the country's economy, Iranian business leaders and analysts say, even as the UN Security Council prepares to consider additional measures to force Iran to curb its nuclear program. The UN's nuclear watchdog issued a report Wednesday that sets the stage for new Security Council sanctions. A first set of limited UN sanctions imposed last March were focused on companies involved in the nuclear program. But unilateral actions that the United States has taken in recent months have been broader, attempting to block dollar transactions into and out of Iran and targeting energy firms and financial activity. The US measures are driving up prices in Iran while increasing business costs and making it tougher for Iran to import ordinary goods, businessmen and analysts said this week. "The sanctions imposed by the US, especially in the past year, have been more harmful than we expected," said Saeed Laylaz, a prominent political and economic analyst in Tehran. "The main impact is that all of our imported goods have become more expensive." US firms had already been banned from doing business with the Islamic Republic. But in recent months, US officials have bluntly warned non-American businesses, too, that they face possible US retribution if caught doing business with Iran. Given the choice between doing business in Iran or America, at least nine major international banks as well as companies in Europe, Japan and Arab countries have quietly cut ties with Iran, according to interviews with banking and government officials in the United Arab Emirates. Alireza Sabaghian, an Iranian-born British citizen who owns a Dubai-based shipping firm, said he has angrily given up on $1 million in yearly trade with Iran to protect his larger business in Europe. "I don't want to put my other business at risk for the sake of making an extra million in Iran," said Sabaghian, whose Alma General Trading has annual shipments worth US$500 million a year. "I'm a British passport holder. I want to go back there." In addition, international banks have curbed most of their dealings inside Iran in recent months, under threat that their US operations may be shut down, a Dubai-based representative of an international bank said on condition of anonymity, because of the topic's sensitivity. Germany's Commerzbank halted dollar transactions with Iran in February after officials at the bank spoke of US pressure. Others dropping some or all of their Iranian business are Britain's Barclays PLC, HSBC Holdings PLC and Standard Chartered PLC; Societe Generale SA and Credit Lyonnais of France; and Credit Suisse Group, UBS AG and Dutch bank ABN Amro Holding. The banks' moves make it tough for Iranian businesses to get letters of credit and loans that are a staple in a nation increasingly reliant on imports. "The main problem is financing," said Nasser Hashempour, vice president of the Dubai-based Iranian Business Council. "No one accepts Iranian letters of credit. That's one reason Iranians are moving out of Iran, because they have to establish relations with foreign banks." Another Dubai-based international banker, also asking his name be withheld, said Iran's hardline government officials and the businesses they control spend cash oil revenues for imports, and are thus less affected than private Iranian merchants by the American measures. Laylaz said the US measures are leading Iran away from traditional suppliers in western Europe and closer to Russia and China, where US policies have less traction. Laylaz expects trade with China to reach its highest level ever this year, around US$16 billion. But in Germany, one of Iran's traditional largest trading partners, exports dropped by 6 percent last year. German companies reported pressure to cut business with Iran and exports have dropped further this year, according to EU figures. Dubai and nearby ports in Bahrain and Pakistan are serving as a lifeline for Iran, enabling businessmen to bypass the sanctions but also adding to their business costs. Dubai expects to see its trade with Iran jump to US$10 billion this year from US$7.8 billion in 2006. As one example of how such trade works, Sabaghian said a friend in Iran tried to import gas cylinders from Germany this year but was refused. The friend then reordered with Dubai as the destination and transshipped the cylinders to Iran. The ruse got him his cylinders but added to his expenses. "The sanctions are a financial burden. But they don't make it impossible," Sabaghian said. US Vice President Dick Cheney, visiting here earlier this month, asked the United Arab Emirates to join the American effort to isolate Iran. But Cheney was told the Emirates won't consider the restrictions unless they are adopted by Iran's other neighbors, said a government official speaking on condition of anonymity because of the information's sensitivity.


Related Content

Bushehr nuclear Iranian
August 5, 2014
Iran and the bomb: The future of negotiations

By YONAH JEREMY BOB

Israel Weather
  • 11 - 19
    Beer Sheva
    14 - 18
    Tel Aviv - Yafo
  • 9 - 15
    Jerusalem
    13 - 17
    Haifa
  • 12 - 23
    Elat
    12 - 21
    Tiberias