Volume. 11955

Iran cannot withdraw much oil revenue under interim nuclear deal: WSJ
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c_330_235_16777215_0_http___172.19.100.100_images_stories_famous_02_am32.jpgTEHRAN – The Wall Street Journal in an article published on Sunday said that Iran had not been able to withdraw much of the unfrozen oil revenue it was to receive under a November interim nuclear deal between Tehran and the major powers.  
The problems were outlined in interviews with nearly a dozen Western and Iranian officials and diplomats, bankers and lawyers with knowledge of the issue.
An estimated $100 billion in payments for Iranian oil imports has been locked up in accounts in the importing countries in compliance with U.S. banking sanctions against Iran. $4.2 billion was to be freed up gradually under the interim deal.
One reason Iran is having difficulty tapping the unfrozen revenue is that banks remain fearful they could violate tight U.S. financial sanctions, especially while the outcome of talks on a final nuclear deal remains uncertain. If financial institutions flout sanctions, they could be shut out of the U.S. banking system, which clears dollar transactions, or face huge fines.
Some Western officials partly blame Iran for the delay. Tehran has been slow to set payment instructions specifying where the money should be sent and, in some cases, how it will use the funds—information banks may require before releasing the money.
Iran’s United Nations mission and foreign ministry officials declined to comment. However, Iranian Foreign Minister Javad Zarif in March publicly questioned the West’s willingness “to fulfill its commitments” to implement November’s accord. Western officials insist they are doing so.
Iran’s difficulty withdrawing the funds could undermine confidence building between Tehran and the six world powers it negotiates with. It could also stymie President Hassan Rouhani’s ability to showcase domestically the benefits of the interim nuclear deal. He came to office last summer promising diplomatic outreach to ease sanctions.
The negotiations between Iran and the six powers, now focused on finding a comprehensive and permanent solution to the decade-long dispute over Tehran’s nuclear program, are set to resume in Vienna on Tuesday.  
Iran’s economy has stabilized somewhat and oil revenue has increased since the interim deal was reached in November.
Seeking to speed the release of funds, the U.S. and other Western governments have stepped in, working quietly to encourage international banks and regulators to help Iran access the revenue, diplomats said. But those efforts have only partly succeeded.
The $4.2 billion in unfrozen oil revenue was the biggest single gain in a package of sanctions relief worth around $7 billion for Iran, according to U.S. officials. In exchange, Iran agreed to scale down its nuclear program for six months. Iran says its pursuits are for purely peaceful purposes such as producing energy and medical research.
The difficulty helping Iran withdraw the funds shows the practical challenges of delivering money to a country largely cut off from the global banking system because of the tight web of sanctions.  
On Feb. 3, the first payment of $550 million in unfrozen oil revenue was transferred from a Japanese bank to Banque de Commerce et de Placements, or BCP, in Switzerland. As of Wednesday, the funds hadn’t been withdrawn.
A BCP spokesman declined to comment. A spokeswoman for the Swiss Economic Affairs department, Marie Avet, confirmed the money had come to a Swiss bank. Switzerland, which hosted the talks that produced November’s accord, had been asked to help facilitate the repatriation of funds, she said.
A senior U.S. official confirmed that three tranches, worth $1.55 billion, have been released—meaning the U.S. has legally informed banks holding the money it is no longer subject to sanctions. The U.S. plans to unfreeze another $1 billion over five days starting Wednesday. It remains unclear where the other two tranches of already released funds are.
Several diplomats said Iran hasn’t yet tapped a significant part of the total. Western officials said they were making progress identifying a group of banks that can work with Iran to repatriate unfrozen funds.
“We have done everything we made a commitment to do,” a senior U.S. official said late Friday. “Our teams have been working very hard to facilitate everything that was required.”
Banks were already cautious about financing trade with Iran that was permitted before the interim deal, such as food and medicine. That remains true of commerce opened up under the November deal. Several European banks have been hit by huge fines from U.S. authorities over the last two years for allegedly engaging in improper dealings with Iran. BNP Paribas said in February it had set aside $1.1 billion against potential fines for any violations of U.S. sanctions.
After years of restrictions, “financial institutions are very careful when it comes to Iran and, before doing something, want to be reassured 1,000 times,” said one Western diplomat.
To ease concerns, the U.S. has sent letters to a number of banks “clarifying the applicability of U.S. sanctions to various circumstances,” a senior official said. There have also been regular discussions between U.S., European and Iranian officials in recent weeks about the problem. 
Banks also face practical hurdles in helping Iran tap the money, said Farhad Alavi, a lawyer with Akrivis Law Group, a Washington-based firm. Delivering cash or precious metals could, in some cases, require firms to get hold of and then fly crate-loads of bank notes or gold to the Iranians at significant cost.

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