Switzerland Expands Trade Relations With Iran

EghtesadOnline: The transport agreement with Switzerland, signed during a visit to Bern in 2018 by Iranian President Hassan Rouhani, envisages the complete liberalization of goods transport and the removal of administrative barriers.

News ID: ۷۸۵۶۷۲

19 November 2020

A bilateral trade agreement has been in force since 2017, Swissinfo.ch reported.

“Collaboration in the transport sector is part of the roadmap Switzerland and Iran agreed upon in 2016,” a spokesman for the Federal Department of Foreign Affairs explains.

The roadmap, he added, is the basis for deepening Swiss-Iranian relations.

The agreement is the latest example of Switzerland’s efforts to keep up its good economic and diplomatic relations with Iran.

“Since the nuclear deal was agreed upon in 2015, Switzerland has been trying to reactivate its economic and trade relations with Iran,” says Christian Blickenstorfer, former Swiss ambassador to Saudi Arabia, the United States and Germany, who was also political counsellor at the Swiss Embassy in Iran in the 1980s.

“After the nuclear deal and the gradual lifting of the sanctions, several European countries were hoping to expand their relations with Iran.”

A La Carte Sanctions

Even though Switzerland adhered to the sanctions imposed by the United Nations on Iran in 2007, it only partially observed the sanctions put in place by the European Union a few years later. After the implementation of the nuclear deal in 2016, Switzerland even lifted some of its sanctions.

“It was clear that Switzerland had to adhere to the sanctions imposed by the UN, but not to the sanctions imposed by the US or the EU,” says Blickenstorfer.

The problem with the US sanctions was that companies and banks that did not observe these sanctions were at risk of being prosecuted in the US.

"Companies doing business in the US as well as banks are not prepared to take such risks,” he said.

Humanitarian Channel

Switzerland managed to find a partial solution to the problem. In February 2020, a payment mechanism for the delivery of humanitarian goods to Iran was devised.

Under the “Swiss Humanitarian Trade Arrangement”, Swiss firms in the food, pharmaceutical and medical sectors have a secure payment channel with a Swiss bank for their exports to Iran.

“The payment channel for the delivery of humanitarian goods and pharmaceuticals to Iran could only be launched with the agreement of the US. It was conceived for purely humanitarian reasons to avoid a shortage of essential goods in Iran,” Blickenstorfer explains.

It is not by chance that Switzerland managed to broker this payment mechanism in cooperation with the relevant authorities in the US and in Iran.

Switzerland has nurtured good diplomatic relations with Iran for 100 years, and through its protecting power mandate has represented US interests in Iran since 1980.

“This mandate to represent US interests … allows Switzerland to maintain normal relations with Iran,” says Blickenstorfer, adding that relations were not always easy. “In Iran, we are dealing with a government that is completely different from ours.”

During his election campaign, US President-elect Joe Biden pledged to reactivate the nuclear deal with Iran.

“If Biden were to seek dialogue with Iran just like Bill Clinton did, the well-functioning Swiss payment channel could be of use to him,” Blickenstorfer said.