Stephen Foley: Sanctions are hurting Iran - but there are ways round them
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Tuesday 07 August 2012
International sanctions are hurting Iran, but by hook or by crook – and sometimes by US-approved exemption – the country is not frozen entirely out of global trade.
The European Union joined the US in imposing an oil embargo at the beginning of last month and these sanctions are designed to make it hard for other countries to do business with Iran, even if those countries might otherwise be happy to keep trading.
The EU has banned its financial firms from insuring foreign tankers carrying Iranian crude, and the US has been progressively tightening rules designed to choke off financial transfers into and out of Iran – something it is uniquely able to do, because oil is typically traded in US dollars.
As well as direct trading with Iranian institutions, any bank that operates in the US is now banned from trading with any foreign institutions that process payments with Iran – with some exceptions.
The exceptions are trading with institutions in China, Japan and India, financial superpowers that the US cannot afford to cut adrift entirely from the US financial system. In any case, Iran is increasingly bartering oil for goods and services directly with trading partners, such as engineering and other services from Chinese companies, using local currency accounts outside the US system.
And there is always the black market, where Iranian oil is transported on Iranian-owned tankers that switch their flags to countries such as the Tuvalu Pacific islands, or stay out of radio contact, or hawk their wares through Middle Eastern traders willing to supply fake paperwork.
Bit by bit, the pain for Iran is getting worse. Analysts expect Iranian exports to drop 30 per cent in the remainder of the year, and inflation inside the country has leapt to 23 per cent. Meanwhile, the US Congress is pushing for tighter financial restrictions, and regulators are threatening banks – such as HSBC and potentially now Standard Chartered – with huge penalties for any transgressions.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
Israel-Gaza conflict: Israeli targeting policy under scrutiny after shellfire hits a mother and child, a school full of refugees and a doctor’s home
Iraq crisis: Isis orders Mosul shop keepers to cover mannequins
Comic Con 2014 attendees
Students offered grants if they tweet pro-Israeli propaganda
McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...