By Javad Heirannia

Swiss channel appears to be more of a publicity matter than a substantive matter: Nephew

February 14, 2020 - 14:14

TEHRAN –Richard Nephew, who served as the lead sanctions expert for the US team negotiating with Iran, is of the opinion that “the Swiss channel appears, at this point, to be more of a publicity matter than a substantive matter.”

The fellow at the Center on Global Energy Policy at Columbia University, says that the US is wrong when it says that sanctions are not affecting the Iran’s humanitarian trade nonetheless for all the reasons I laid out.

Following is the text of the interview:

Q: The Swiss government announced in a statement a few days ago that the first payment through the country's commercial channel with Iran for dispatch of medicines was being tested and would soon be complete. The Swiss Embassy in Tehran also tweeted: "The milestone is the day after the first successful payment for the drug cargo, tentatively, and the preparation of a financial mechanism for delivering humanitarian goods, agricultural supplies, food, pharmaceutical and medical equipment. Given that the channel is licensed by the US government, doesn't that mean that humanitarian trade with Iran is under sanctions, contrary to what the Trump administration claims?

A: No, not really.  The issue is not that humanitarian trade is explicitly under sanctions.  It is not.  There are clear, well-articulated and longstanding exceptions to sanctions for humanitarian goods.

The problem is that, in the absence banking channels, companies find it difficult to engage in such business.  And, banks, for their part, find the absence of other business interests and possibility of being involved in trade involving sanctioned entities -- like the IRGC -- too risky to be worthwhile.

So, what you have is business that is not sanctioned, but the absence of any means to complete it because of sanctions.  

 That is why mechanisms are needed to manage these consequences.

Q: Iran's First Vice President, Isaac Jahangiri, says that the United States says it has not imposed any restrictions on the import of drugs and food into our country, because the billions of dollars of Iranian money we have in various countries when we want to get money from them are inaccurate. Moving dollars to buy medicine and food, the US does not allow. What is your assessment of these statements?

A: That is indeed not true.  There are even exceptions to U.S. sanctions -- stated in law -- to permit oil revenues that are held abroad to be used for humanitarian goods.  The law explicitly says "The President may not impose sanctions under paragraph (1) with respect to any person for conducting or facilitating a transaction for the sale of agricultural commodities, food, medicine, or medical devices to Iran." 

The problem is that banks are reluctant to engage in this trade, even if they are allowed to do so legally, and governments have been unable or unwilling to persuade them differently.

Q: The launch of the Swiss financial channel seems to be a publicity issue as to why it is allowed to import $ 2 million through the Swiss financial channel, while the amount of imported medicine to Iran alone was over $ 5 billion this year. For which money was paid and imports were made. What is your assessment? Can a channel with this limited volume of business meet some of Iran's pharmaceutical needs?

A: I agree that the Swiss channel appears, at this point, to be more of a publicity matter than a substantive matter.

Q: In my recent interview with you, You stated that new US sanctions and changing the label of the Iranian Ship Company or changing the label of the sanction of the Central Bank of Iran is a serious obstacle to humanitarian trade with Iran, including medicines, and the US government can no longer claim In particular, humanitarian trade with Iran has not been restricted. Why is it that the US government does not lift restrictions on humanitarian trade with Iran, despite the fact that this is obvious?

A: Again, the issue is not that the trade is restricted per se, but that because it is so difficult to do, companies and banks are unwilling to use the exceptions that exist.

And, the U.S. government has not done enough to persuade them otherwise.  The real problem is that it is easy to have exceptions but to get trade going, the United States would have to encourage banking activity with Iran more generally, as well as other business.  This is what the U.S. government is not prepared to do because that would undermine the sanctions strategy it has developed.

Q:  Iran has financial demands from some countries, and if it had not been for sanctions, Iran could have imported humanitarian items from those countries. Why doesn't the US government, at least under its own supervision, allow these items to be imported to Iran?

A: As I've said, the United States does allow that.  

It just doesn't encourage it and the difference between "allowing" and "encouraging" is why you don't see trade taking place.

Q: I understand that the drugs themselves and the humanitarian items are not directly sanctions. But changes to labels and other sanctions make it impossible for Iran to buy and pay for them. It is like telling a customer that you have no problem buying from this store and you can buy whatever you like, but you cannot afford to pay. Well, then, whether it be a boycott or not, it paid off. What is your assessment?

A: Yes but that’s precisely my point: the sanctions are not on the goods themselves. So, Iran is wrong when it says they are and the US is right when it says they aren’t. But the US is wrong when it says that sanctions are not affecting this trade nonetheless for all the reasons I laid out. And the labels and whatnot are not the issue here. It is the fundamental problem that banks won’t do the business and companies are not incentivized to find solutions to what problems exist.
 

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