CBI Funding Vaccine Import

EghtesadOnline: The Central Bank of Iran said it has found a way to pay for the import of Covid-19 vaccine after previous efforts failed.

News ID: ۷۵۱۷۲۶

26 December 2020

The announcement was made by the Central Bank of Iran Governor Abdolnasser Hemmati on Thursday in a note posted on his social media account.

Hemmati said the bank had ordered payment of €200 million to purchase 16.8 million doses of the vaccine soon after receiving an initial approval from a South Korean bank to transfer the money.

Earlier he criticized the United States for blocking CBI efforts to purchase the vaccine, saying that all vaccine suppliers were required to receive special permits from the Office of Foreign Assets Control (OFAC), the financial intelligence and enforcement agency of the US Treasury Department.

In a talk with state TV late Thursday Hemmati said the outgoing US administration had finally agreed to issue a permit to transfer the money from South Korea "under the pressure of world public opinion ".

The senior banker said Covax has agreed to sell the vaccines to Iran but the foreign bank in charge of transferring the money first needed OFAC approval, which he described as "oppressive and against the US administration’s claim about exempting humanitarian trade” from the economic siege imposed by Donald Trump, the delusional US president.

Failure of 'U-Turn Transfer'

It appears that the CBI in the past tried to transfer the money using the so-called 'U-turn transfer' mechanism, which reportedly failed due to South Korean officials' refusal to guarantee the payment.

U-turn transfer refers to a way for US dollar transactions to take place where the customer or the seller is facing US sanctions. It is used for transactions involving the transfer of funds from a foreign bank that pass through a US financial institution and are then transferred out to a second foreign bank.

The Korean won had to be transferred from a Korean bank to J.P. Morgan in the US where the Korean currency was supposed to be changed into the greenback and again transferred to UBS bank of Switzerland, in which the Covax has an account, he said.

"Because the Koreans refused to guarantee security of the payment, the CBI didn’t purchase the vaccine through this channel hesitating that the US would seize the money during the transfer process."

Finally, the CBI approached two banks in Turkey and Europe and one in Iran to transfer the funds from South Korea to the Swiss bank processing the Covax payment.

Covax is global initiative operating under WHO which brings together governments and manufacturers to ensure eventual Covid-19 vaccines reach those in greatest need. The initiative strives for fair and equitable distribution of vaccine doses. Iran announced in October that it had joined the Covax initiative.

Trump walked away from the landmark 2015 Iran nuclear agreement in 2018 and announced tough restrictions on Iran’s banking, insurance and shipping industries that in essence have taken the form of an economic blockade.

In the latest round of hostile sanctions in October, the US Treasury Department imposed fresh sanctions against 18 Iranian banks aiming to totally cut off the country from the world's financial system and choking off the already shrunk government revenues.

Iran has more than $7 billion blocked in South Korean banks. The country was a major buyer of Iranian oil before the sanctions were imposed.

With the death toll exceeding 54,000 and infections reaching close to 1.2 million, Iran is grappling with the largest and deadliest plague in the Middle East.

The number of death tolls and infections has declined in recent days thanks to lockdowns of the past two months to stem the spread of the deadly disease. The safety protocols include night curfews, travel bans and closure of most non-essential businesses.