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France Proposes $15 bln Credit Line Plan For Iran, If U.S. Allows It

File - Abbas Araqchi meeting with French Foreign Minister Jean-Yves Le Drian on Tuesday July 23

After long negotiations between France and Iran over proposed credit lines, French Foreign Minister Jean-Yves Le Drian says U.S. approval of any arrangement is crucial.

Iran’s Deputy Foreign Minister Abbas Araqchi, accompanied by a delegation, arrived in Paris on Monday and held ten hours of talks with French officials according to the Iranian embassy.

The result of weeks of mediation efforts by French President Emmanuel Macron appears to be a proposal to provide Iran with $15 billion of credits for 2019, backed by Iranian oil, in exchange for Iran to return to full compliance with the 2015 nuclear agreement.

In May Tehran suspended its full compliance with the landmark accord and began intensifying uranium enrichment. It has been demanding Europe’s help to sell oil and conduct trade, despite U.S. sanctions. But any European credit line to Iran would lessen the economic pressure lever Washington has been using against Tehran.

If the credits come from the private sector, international banks will not get involved without U.S. agreement, because they might violate sanctions and face legal and financial consequences.

The French idea is "to exchange a credit line guaranteed by oil in return for, one, a return to the JCPOA (Iran nuclear deal)...and two, security in the Gulf and the opening of negotiations on regional security and a post-2025 (nuclear program)," le Drian told reporters. "All this (pre)supposes that President Trump issues waivers."

Washington might like the idea of Iran negotiating over security in the Persian Gulf and the future of Iran’s nuclear program, but Tehran can simply get the economic concession of the French-proposed credit line and then fail to negotiate seriously.

That is why President Donald Trump’s administration may be asking tough questions, as the French inform the American side of the details of the talks with Iran. The U.S. administration or at least some of its officials might be thinking that they have all the time to maintain the status quo, since Iran’s frozen oil exports are not crucial in the market and Washington has nothing to lose by keeping the pressure up on the regime in Tehran.

"The question is to know whether we can reach this $15 billion) level, secondly who will finance it, and thirdly we need to get at the very least the tacit approval of the United States. We still don’t know what the U.S. position is,” a source aware of the negotiations told Reuters.

A senior Iranian official familiar with the negotiations said: "France has offered the credit line of $15 billion but we are still discussing it. It should be guaranteed that we will have access to this amount freely and also Iran should be able to sell its oil and have access to its (own) money."

The key word here is “freely”. Washington will be reluctant to allow Iran to do whatever it wants with the money, since that can easily go to military expenditures and to Iran-backed extremist groups.

"President Macron is trying hard to resolve the issue and help to save the deal ... and we have overcome some issues and narrowed gaps but still there are remaining issues”, the senior Iranian official told Reuters.

A second Iranian official said: "Although the EU and particularly France have goodwill, they should convince the U.S. to cooperate with them... If not, Iran is very serious about decreasing its nuclear commitments. There is no logic to respect the (2015) deal, if it has no benefits for us."

French Finance Minister Bruno Le Maire will be in Washington on Tuesday in part to discuss the credit mechanism. One diplomat said that might be when the United States gives its response to French proposals.