'Egypt-Iran jointly owned bank used to bypass sanctions'

The Misr Iran Development Bank is being used to transfer millions of dollars to Teheran, circumvent int'l economic regulations.

November 17, 2010 16:30
2 minute read.
Mahmoud Ahmadinejad in Lebanon

ahmadinejad peace out 311. (photo credit: AP)

Financial ties between Egypt and Iran have recently improved as a result of the Misr Iran Development Bank (MIDB), jointly owned by the two countries, according to a report by the Atlantic Monthly on Monday.

According to the report, the MIDB, founded in 1975, has become a potential route for Teheran to bypass imposed economic sanctions with Egypt. The bank serves as evidence of the complex challenge faced by the US in enforcing international sanctions against Iran.

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Jonathan Schanzer, a former intelligence analyst at the US Treasury, is vice president of research at the Foundation for Defense of Democracies, revealed the connection.

The report explains that Cairo controls 59.86 percent of the bank, which it splits equally between the state-owned National Investment Bank and the semi-state-owned Misr Insurance Company. The remaining 40.14% of MIDB is owned by the Iran Foreign Investment Company (IFIC) at an estimated value of $80 million. The IFIC is a subsidiary of the country's Oil Stabilization Fund, a wealthy, independent company which accumulates funds for the Iranian government, says the Atlantic Monthly. The fund holds investments in the Middle East, Africa, South America and other countries throughout the world.

The fund was created in 1999 to protect Iran from the unpredictability of the oil market, says the report. When oil prices were on the rise, the country injected money into the fund and invested it through IFIC. When oil prices were low, Iran pulled money from the fund to compensate for the deficiency. As a result of heavy international sanctions recently, Iran has been pulling funds drastically. The fund was put on the US Treasury Department's Iranian Transactions Regulation (ITR) list in August after it discovered that the fund was a way for Teheran to bypass the sanctions. By placing the company on the black list, it became illegal for US citizens to engage in business with the company since it was owned by the Iranian government.

The Atlantic Monthly argued that Iran is striving to utilize the MIDB in the same manner. The IFIC may currently be using the Egyptian bank to bypass the sanctions. According to the government-controlled Teheran Times, the bank transferred $50 million to Iran in 2009 when the international community began debating how to punish Iran for its nuclear program. The Teheran Times also reported managing director Mehdi Razavi that the bank would open its first official branch in the country. This move allowed Teheran the ability to transfer funds free of restriction.

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