Iran sanctions lifted: opportunities for companies but not from the United States

Iran sanctions lifted: opportunities for companies but not from the United States

Which Iran sanctions are lifted and what does this mean

Iran is the second largest economy in the middle east and north Africa (MENA). It has one of the largest reserves of natural gas that supplies the world, and the 4th biggest oil reserve.

Though the Iranian market is worth 400$ billion. Its nuclear program had been a sensitive subject in the international community in doing business with Iran.

Due to this, numerous countries showed concern that the nuclear program in the country could develop a weapons program. This lead to sanctions being imposed by the UN Security Council which isolated the country, economically and politically, from the rest of the world.

In July 2015, Iran came to an agreement with the US and other countries to end the economic sanctions that were imposed by the UN Security Council that gravely affected the country’s economic growth. The P5+1 (the UN Security Council’s 5 permanent members: China, France, Russia, UK, US plus Germany), agreed to lift the economic sanctions after Iran showed a peaceful atomic research project that met International Atomic Agency standards.

US Agreement with Iran

Iran celebrated the move that the UN Security Council had taken. Lifting the economic sanctions from the country is one of the biggest curbs that occurred in the country’s history since the sanctions in 2012.  Europe, Asia and the rest of the world are now free to invest in Iran’s trade and industry.

Even though US is a part of the UN Security Council and in agreement to lift the sanctions in the country, relations between Iran and the US still present great challenges. When the economic and nuclear sanctions were placed; the US imposed other sanctions over the country’s human rights policies. These conditions essentially mean that American citizens and companies are not allowed to invest and trade, in any form, within or with Iran. Though these sanctions only pertain to US companies, the effect spreads beyond the American shores.

The US is known to have great power, politically and economically. It is also the largest importer of goods and the second largest exporter worldwide

Financially, the US has great control over international banks via capitalized foreign subsidiaries and operations. Due to this control, it can influence investment decisions related to Iran and its industry.

Financial Segregation

According to the Office of Financial Assets Control in the Treasury Department, no payments made to Iran can be processed through the US financial system, such as US banks or subsidiaries. If one does not follow this rule, there will be serious consequences and charges. This forces international financial organizations conducting business with the US to separate Iranian money from US assets. This is not easy as almost all banks have a substantial partnership with US financial institutions.

Companies who want to invest in Iran are required to find banks that will work with them. These usually include the smaller banking institutions with no significant transactions in the US, but this can be risky.

With the 2012 UN sanctions lifted, Iran’s country data shows improvement in its economy but with the dark cloud of US influence still looming over its progress path. International business is still limited to Iran with a lack of support from the largely US-dominated global financial setup. Its own natural resources, however, are adequate enough to ensure the nation’s advancement while European and Asian businessmen are free to invest in its markets.

This entry in Asia was updated on August 1, 2017 by specialist.