Despite repeated public assurances from US Secretary of State John Kerry that American sanctions would not stand in the way of European businesses making deals with Iran, the latest reports indicate that the problem is as bad as ever, and that most European banks are still being scared off by US threats.
The P5+1 nuclear deal, which lifted sanctions on Iran is January, was to unfreeze an estimated $100 billion in Iranian assets, and free Western companies to sign major contracts with Iran to modernize their oil industry and economic infrastructure with that money.
The problem is, the US sanctions relief came largely “on paper” only, and the Treasury Department has bragged to Congress that they continue to block Iran from conducting any US dollar denominated business, as well as keeping foreign banks with any ties to the US from financing deals that are otherwise perfectly legal, for fear of US retaliation.
Much of Iran’s “unfrozen” assets remain inaccessible in foreign banks, and as European companies line up for juicy contracts, EU officials are complaining that many of the deals are being effectively sabotaged by US intransigence.
French oil major Total SA is one of the few companies so far to pull off any deals with Iran’s national oil company, but were unable to use their normal bank, BNP Paribas, to finance the project, as the bank cited previous US fines of billions of dollars for doing business with Iran.
To get around this, Total SA instead used three much smaller European banks with no real exposure to the US economy to finance the deal, hardly ideal for anyone involved, and certainly not the way things were supposed to work in “post-sanctions” Iran.
Suboptimal though this has been, Total SA is one of the few even to get this far with a deal, as both BP and Royal Dutch Shell reported that they have been unable to make any deals with the Iranians because they haven’t been able to find any banks at all to deal with. BP, ironically, got its start as the Anglo-Iranian Oil Company, which had a virtual monopoly on Iranian oil for decades.