By staff and agency

Iran struggles to buy medicine under U.S. sanctions

July 31, 2020 - 18:39

In a report published by Reuters on Thursday, it is said that Iran is struggling to buy medicine and food under the United States’ sanctions despite such supplies being exempt from sanctions.

Pointing to the Swiss Humanitarian Trade Agreement (SHTA), a trade channel launched by the Swiss government to facilitate such Iranian purchases from Swiss companies, it said, “Yet Iran’s central bank (CBI) has been unable to transfer the billions of dollars worth of oil export cash it had built up between 2016 and 2018 to bank accounts working with the SHTA, the five sources with knowledge of the matter told Reuters.”

It added, “That money was accumulated in bank accounts in countries that Iran sold oil to, especially in Asia, with its biggest customers including South Korea and Japan, in the years after Iran signed the nuclear accord with world powers, but before the Trump administration withdrew and reimposed sanctions in 2018.”

“The funds were frozen when the sanctions, which target the CBI as well as dollar transactions with Iranian entities, were reintroduced. As a result, international banks and their governments - whom they seek clearance from - are wary of allowing funds to be released without specific authorisation from Washington for each transfer, the sources said.”

It is also said in the report that the blockage, according to the sources, illustrates how the complexity of the U.S. sanctions has made many banks, companies, and countries wary of doing any business with Iran, even when exemptions exist because breaches can involve huge financial penalties and being effectively shut out of the crucial U.S. financial system.

“The impact has also been felt in other areas, with Reuters previously reporting many foreign shipping companies and insurers are unwilling to provide vessels or cover for voyages, even for approved commerce,” it added.

Switzerland’s government said on Monday that a Swiss pharmaceutical company had completed the first transaction under the new humanitarian trade channel with Iran, adding more transactions would follow.

The State Secretariat for Economic Affairs (SECO) told Reuters that the SHTA needed “regular transfers of Iranian funds from abroad for its functioning”, adding that U.S. authorities had given assurances that they would support such transfers.

“We are in talks with the USA and other partners on this matter. However, we cannot provide information on individual transfers,” SECO said, without providing further details.

SECO also did not comment on how the first confirmed transaction was funded.

An Iranian official, speaking on condition of anonymity, said Tehran had been in contact with countries where it had funds to try to transfer the money under the Swiss initiative.

“These countries have approached the U.S. to secure its approval for such a transfer, but to no avail,” the official said.

Swiss bank BCP is the only financial institution that has committed to the SHTA so far and agreed to receive Iranian funds under the scheme, the sources said.

BCP did not respond to requests for comment.