A new round of restrictions on Iran’s economy is in the making. The recent blocking of Iranian clients’ bank accounts in the Persian Gulf area and Southwest Asia is one of the biggest manifestations of the new restrictions.
“Iranian bank accounts are being blocked one after another in Turkey, Oman, and the United Arab Emirates, particularly in Dubai and Abu Dhabi. This is a new chapter in imposing banking sanctions on Iran,” Mehr News Agency, reported on May 30.
The Iranian economy -- already under the heavy burden of Western bank restrictions -- now faces new dilemmas rooted in increasing hostility by regional banks toward Iran.
Time and again, the conservatives in Iran have branded the Joint Comprehensive Plan of Action (JCPOA), or Tehran’s nuclear agreement with major powers, as a failure and have singled it out as the culprit of Iran’s economic difficulties.
However, the real cause here are the U.S. sanctions imposed on Tehran in 1980s and 1990s. These sanctions are related to Iran’s poor and unacceptable record for human rights, terrorism, and money laundering. So therefore banking sanctions have nothing to do with JCPOA.
As a result, major banks are preferring to avoid the Iranian market.
Nevertheless, beyond these primary sanctions and ongoing tensions in Tehran-Washington relations, Iran’s banking ties are under heavy pressure from two other factors: the pressures exerted by the Financial Action Task Force (FATF) and a lack of coordination and compatibility between Iran’s banking system and international standards.
The internationally influential and powerful FATF was established to fight money laundering and later to block terrorists’ financial resources.
FATF places Iran beside North Korea at the top of the list of countries with the highest economic and financial risks.
The problem emerged after the 1979 Islamic Revolution following a widespread so-called cleansing move in Iranian banks, which reduced expertise and adherence to international standards. Soon, after nuclear sanctions, the problem became even more complicated.
During a decade of nuclear sanctions, Iran was deprived of participating in progressive international developments in the legal and banking fields.
The newly intensified banking restrictions against Iran by Turkey and Persian Gulf countries, if continued, would undoubtedly be ominous news for Iran’s economy. It’s worth noting that Iran, during the nuclear sanctions, used its Arab neighbors’ financial facilities to sidestep the backbreaking restrictions. Furthermore, Iran used Turkey as a bridge for keeping its relations with international economic society.
Iran’s economic and political circles attribute the new restrictions to increasing diplomatic tensions between Tehran and Riyadh, as well as the inevitable outcome of President Donald Trump’s recent visit to Saudi Arabia.
Economic circles in Iran believe the Saudis have organized and orchestrated a comprehensive global assault against Tehran’s economic interests.
Saudi Arabia’s considerable weight in the Persian Gulf and its widespread efforts against Iran cannot be denied. However, not every small country in the region obediently complies with whatever Riyadh orders them to do.
Smaller countries have their own agenda and interests to look out for, as well. Moreover, there are many cases of diplomatic and political matters where their approach is in contrast with that of the Saudis. Recent events, for example, have brought to light the sharp differences between Saudi Arabia and Qatar.
One should not forget the fact that the main and lethal cause for Iran’s poor banking system and financial and economic problems is inside the economic and banking system itself. Sanctions and regional tensions exacerbate the inherent weaknesses.