SearchU.S. Pushes to Expedite Some Humanitarian Shipments to Iran - WSJ

U.S. Pushes to Expedite Some Humanitarian Shipments to Iran - WSJ... 29/07/2014 News

Keywords:#American, #Arabic, #Bank_Markazi, #Belgium, #Benoît_Faucon, #Boeing, #Citigroup, #European, #Ferrari, #German, #Iran, #Iran_Air, #Iranian, #Islamic, #Islamic_Republic, #Islamic_Republic_of_Iran, #Islamic_Republic_of_Iran_Broadcasting, #January, #Japan, #Joel_Schectman, #Lufthansa, #Lufthansa_Technik, #Middle_East, #Middle_East_Bank, #Netherlands, #OFAC, #Office_of_Foreign_Assets_Control, #Online,, #Parviz, #Russian, #Siemens, #Siemens_AG, #State_Department, #Swiss, #Switzerland, #Tehran, #U.S._Treasury, #Wall_Street, #Wall_Street_Journal, #Washington

By Benoît Faucon and Joel Schectman Updated July 28, 2014
Amid a diplomatic thaw earlier this year between Tehran and the West, U.S. officials had a message for European companies eager to get back into Iran: Take it slow.
Today, Washington is pushing some of them to speed things up.
In recent weeks, U.S. officials have been reaching out to a handful of European companies and asking them to expedite the sale of medical goods to Iran, a market they were struggling to gain access to just a few months ago.
European drug makers Bayer AG BAYN.XE +0.59% and GlaxoSmithKline GSK.LN -0.60% PLC, as well as Siemens AG SIE.XE +0.14% —which has a large medical-equipment business—have all been approached by Washington officials eager to expedite the sale of humanitarian goods into Iran, according to executives and one of the U.S. officials. After Iran identified specific pharmaceutical companies it wanted to trade with, "we have notified those companies that this [payment channel] is available to them," one of the U.S. officials said.
The encouragement comes just after the U.S. extended an experimental six-month period of lighter sanctions, through November. The loosening was intended to smooth the way for a deal with Iran over its nuclear program, but a Wall Street Journal review of applications for licenses by businesses seeking to do business in Iran shows that few were willing or able to take advantage of the modest relaxation.
While many companies have shown interest in wading into Iran, few are jumping at the opportunity. In fact, fewer companies appear to have sought permission to do business in Iran during the relief window than when sanctions were in full force. The records, obtained through a Freedom of Information Act request, show that 230 licenses were granted in the first three months of 2014, when the easing began, compared with 390 a year earlier. Most of the applications were made by medical-related companies that have long received humanitarian waivers to supply Iran.
The limited nature of the sanctions relief, and the complexity of doing any business with a country that has become toxic for international banks, made the six-month window moot for most companies, trade experts say. "Let's say you get a license--what bank is going to process that transaction?" said Erich Ferrari, an export control attorney.
Now, the U.S. is taking further steps to address such impediments. The U.S. is clearing banks in Switzerland and Japan, for instance, to help handle payments for the humanitarian shipments, according to a U.S. official familiar with the effort. And it is allowing them to access Iranian oil revenue—above and beyond what's already been unfrozen by the sanctions relief—as payment for the shipments, this official said.
The aim is to show good will amid the current détente between the West and Tehran. The move to help finance humanitarian shipments is intended "to send a reminder [that the West is] not targeting the average Iranian," another U.S. official involved in the effort said.
A spokesman for Bayer said it was "contacted by the U.S. State Department in June about the new payment mechanism" at Iran's request. A Siemens spokesman said the State Department had reached out to international companies to discuss concerns "humanitarian sales to Iran were being stymied by…uncertainties about the [U.S. Treasury] licensing process, and the reluctance of banks to serve as financial intermediaries."
A GlaxoSmithKline spokesman said it supplies "essential medicines in sanctioned countries, in compliance with applicable sanctions and export controls." Bayer, Siemens and GlaxoSmithKline declined to elaborate further.
To expedite the humanitarian trade, U.S. officials have clarified legitimate payment channels for the shipments.
Japan's Mizuho Financial Group Inc. 8411.TO -0.34% said in a filing last week that it has been providing non-U.S. dollars settlement services in connection with humanitarian trade with Iran after getting a specific clearance from the U.S. government as part of the interim nuclear agreement.
The bank, which couldn't be reached for comment, said it had opened accounts for Iranian state financial institutions, specifically for food and medical trade between U.S.-approved food and medical exporters and Iran.
One Swiss bank, Banque Heritage SA, has been given approval by the U.S. to facilitate humanitarian-trade financing, according to Parviz Aghili, chief executive of the recently-created Middle East Bank in Tehran. Banque Heritage officials declined to comment.
Middle East Bank, a privately-owned bank, has also been approved by the U.S. because it only trades in humanitarian goods. That enables Middle East Bank to work with other banks to facilitate payment for humanitarian goods. He said those banks include ABN Amro Bank NV of the Netherlands, and KBC Group KBC.BT +0.45% NV of Belgium, and German savings bank Sparkasse Leverkusen, which is assisting in Bayer's Iranian exports.
ABN and KBC confirmed they are helping their clients secure payments for humanitarian exports to Iran. Sparkasse Leverkusen didn't respond to a request for comment.
The U.S. outreach comes as some American companies make early steps to restart business with Iran. Last week, Boeing Co. BA -0.11% disclosed it was in talks to sell airplane parts and other safety equipment to Iran Air. As part of its sanctions relief, the U.S. has lifted prohibitions on doing business with companies related to several industries, including commercial aviation, automobiles and petrochemicals. In January, Lufthansa Technik AG also made a maintenance deal with Iran Air, a spokesman said.
Still, other types of businesses have been ensnared by sanctions. In February, the U.S. allowed satellite provider Intelsat S.A. I -1.18% to return to Iran, but it had already lost its business to Russian competitors after being barred in 2012 from beaming the state-run Islamic Republic of Iran Broadcasting. "Now instead of being the incumbent we are trying to win the business back," an Intelsat spokeswoman said.
Just the whiff of an Iranian partner in a project can be enough to freeze a transaction. This occurred earlier this year when a Barclays BARC.LN +0.05% PLC customer was trying to wire money to the Jordanian government, a Barclays spokesman said. The Arabic name of the country's central bank has a similar spelling to Iran's Bank Markazi. Citigroup Inc., C -0.66% which acted as a middleman for the transfer, flagged the transaction and froze the funds, according to the spokesman. A Citigroup spokesman declined to comment.
To unfreeze the funds, Barclays needed a license from the U.S. Treasury's Office of Foreign Assets Control, which took two months to get, according to government records.
For big banks, some of which have paid heavy penalties over sanctions violations, these kinds of headaches can far outweigh the profits, said Serena Moe, a former deputy chief counsel at OFAC, now an attorney at Wiley Rein LLP. "All they get from the transaction is a small processing fee. And then they have to explain these transfers to their bank regulator," Ms. Moe said. "There are many banks that just say 'not worth it.'"
---Officials have recently been asking a handful of European companies to accelerate the sale of medical goods to Iran, a market they were struggling to gain access to just a few months ago.---

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