Why Obama should move to shore up Iran nuclear deal
While efforts have been made to facilitate Iran’s reconnection with the international banking system, much remains to be done.
One of the biggest problems Iran has faced in the aftermath of the lifting of nuclear-related sanctions is its lack of access to the greenback, as dollar transactions would require the involvement of American banks. Tehran said this has also affected non-dollar business and trade dealings. Given that most international trade is conducted in US dollars, Iran has even experienced some issues with accessing its own foreign exchange reserves and revenues generated by oil sales. Referring to the latter, Central Bank of Iran (CBI) Governor Valiollah Seif told The Guardian May 20, “If we want to exchange Omani rials to euros, we don’t need dollars, but the system is designed in a way that it [Omani rial] has to be changed to dollars first, then euros. They should find a way for us to resolve this issue.”
After extended wrangling, the US government last month finally gave Iran limited access to dollars. On Oct. 7, the Treasury amended its Lifting of Sanctions Guidance (“Guidance”) by incorporating a series of new questions and answers (Q&A), including some directly relating to the lifting of financial and banking-related sanctions.
The revised Guidance allows for dollar dealings with Iran through foreign banking institutions — as long as those transactions do not enter the US financial system. The Treasury also did away with the outright ban on foreign transactions with Iranian companies that are likely run by individuals who are subject to US sanctions. The move came amid increasing criticism by Iranian officials that obstacles restricting trade with Iran are still in place despite the July 14, 2015, Joint Comprehensive Plan of Action (JCPOA).
The limited lifting of sanctions for Iran to trade in dollars came after several meetings between senior Iranian and US officials. For instance, on April 14, Seif met with US Treasury Secretary Jack Lew. Of note, on the same day, US House Speaker Paul Ryan expressed opposition to any move to give Iran access to the US dollar.
