Ongoing US sanctions prevent Iran’s reintegration to world banking system

Business Materials 16 February 2016 21:23 (UTC +04:00)

Baku, Azerbaijan, Feb. 16

By Umid Niayesh - Trend:

The continuing US sanctions make Iran's reintegration into global banking system hard, says James Dorsey, senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies.

Iran and the P5+1 group reached a nuclear agreement, which was followed by the Joint Comprehensive Plan of Action (JCPOA, aka nuclear deal), lifting international, nuclear-related sanctions off Iran, however the US still has certain unilateral sanctions against Iran in place.

"It already is affecting investment in Iran," Dorsey told Trend Feb. 16 commenting on the impacts of the US sanctions on Iran's efforts to attract foreign investments.

"For instance, the US banks that clear dollar transactions have advised their clients that they could be penalized for doing business with Iran," he said.

"That effectively means that even though Iran has already rejoined SWIFT, the global electronic transfer system, it is finding it difficult to reintegrate into the international banking system," he added.

Dorsey added that the tumbling oil prices make it difficult for Iran to attract foreign investments into its oil and gas sector, but oil companies will want to ensure that they have a stake there once prices rise.

"With whispers going round that Saudi Arabia may be more willing to allow cuts in production to hike prices, the oil companies' interest, although cautious, is likely to go up," he added.

He further said that one of the major obstacles to investment in Iran is the red tape, corruption, or in other words, the overall difficulty of doing business in the country.

"Iran will have to substantially ease, rationalize and streamline the process, so that one doesn't need paperwork from a labyrinth of different offices," the expert said.

Despite all the aforementioned problems and possible risks, Dorsey believes that Iran is a profitable market for global investors.

"There is always a risk. However, at the end of the day, all segments of the Iranian political map have an interest in attracting investment," he added.


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