US Treasury Must Issue Comfort Letters

EghtesadOnline: Iran will pressure the US Treasury Department to issue letters of comfort to reassure international banks and firms wary of US sanctions about engaging in transactions with Iranian counterparts, the foreign minister said.

News ID: ۷۳۶۳۶۱

30 August 2016

"We will pressure the Americans to respect their commitments and release such a letter," Mohammad Javad Zarif told reporters on Monday.

"[Foreign] banks and economic sectors will welcome the letter," IRNA quoted him as saying after returning from a six-day tour of Latin America that took him to Ecuador, Cuba, Chile, Nicaragua, Bolivia and Venezuela.

Under the 2015 nuclear pact with major powers, Iran acceded to temporary curbs on its nuclear program in return for relief from crippling international sanctions and a resulting cleared path to rejoin global markets.

But it is struggling to access financing from abroad while most major foreign banks fear unwittingly violating vague, residual American sanctions, which prohibit trade with Iran in dollars, through the US financial system.

Iran has pressured the United States to do more to remove obstacles to the banking sector and has sought European leverage to secure better terms from the US.

***Rational Act

Commenting on the issue, the chairman of Majlis National Security and Foreign Policy Commission told ICNA that Zarif's demand is intended to compel the US treasury to account for deterring overseas businesses from Iran's market despite the provisions of the nuclear deal, reports Financial Tribune.

"The main obstacle to the revival of Iran's relations with larger banks originates in the US Treasury Department," Alaeddin Boroujerdi said.

"In fact, the foreign minister has acted rationally to throw the ball into the US treasury's court."

The slow growth in foreign trade has inflamed anti-western sentiments in the Islamic Republic.

Earlier this month, Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei criticized the US approach toward the deal, saying it testifies to its untrustworthy nature and has substantiated the pointlessness of holding negotiations with the Americans and the need to stick to a distrustful view of the US and its promises.

Parliament Speaker Ali Larijani has urged the Atomic Energy Organization of Iran to begin to consider ramping up nuclear enrichment.

Iranian business leaders believe the US has failed to spell out exactly what is permitted and what is not, maintaining uncertainty and putting off international banks from processing Iran-linked transactions.

The US administration denies it has done little to address the issue, claiming it has gone to great lengths to clear up misunderstandings among banks and businesses. However, bankers and investors argue there is still little clarity on what trade could be done.

Iran's push through diplomatic channels to have its grievances heard led to a joint statement issued by the United States, Britain, France and Germany in May to reassure cautious foreign investors.

The statement also urged Tehran to make itself more attractive to investors.

"For Iran to realize the economic improvement it desires, it will also have to take steps to create an environment conducive to international investment... We are ready to fully support Iran's efforts in this process," the four nations said in the statement.

Experts partly blame Iran's complex regulations, a lack of transparency in its banking system, unclear dispute resolution mechanisms and labor issues for the behavior of foreign businesses.

Tehran has complained that the statement has yet to be backed by practical steps.