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Islamic Republic Tests Old And New Tactics To Evade Sanctions

Iran -- Iranian jailed tycoon, Babak Zanjani attending court hearing session
Iran -- Iranian jailed tycoon, Babak Zanjani attending court hearing session

While the shadow of renewed sanctions loom over Tehran and Iran’s oil production is expected to experience a dramatic downfall this November, Tehran has been testing the waters for tactics to circumvent sanctions.

One of these tactics has already failed before Tehran’s first step, while another, which was tried out previously has left a bitter legacy of corruption, money laundering and criminal charges.

President Donald Trump pulled the United States out of the nuclear deal with Iran in May and moved to reinstate economic sanctions against Tehran. U.S. officials also warned that other nations would face sanctions unless they stopped doing business with Iran.

The circumvention tactic that failed before launch was disclosed as Comoros scrapped over 100 passports sold to Iranians most probably intended to be used for evading impending banking sanctions.

Reuters reported on June 29 that “more than 100 of 155 people who had their Comoros passports cancelled in January were Iranians. They included senior executives of companies working in shipping, oil and gas, foreign currency and precious metals – all sectors that have been targeted by international sanctions on Iran. Some had bought more than one Comoros passport.”

On July 1, Vice-President Es’haq Jahangiri announced that Iran will allow private companies to export crude oil to help beat U.S. sanctions.

"Iranian crude will be offered on the bourse and the private sector can export it," Jahangiri said in remarks about looming U.S. sanctions, carried live on state television, adding an explicit threat to Tehran’s competitors in the international oil market, "Anyone trying to take away Iran's oil market (share) would be committing great treachery against Iran and will one day pay for it."

However, Jahangiri did not elaborate on the nature or identity of the private sector entities he invited to export Iran’s oil.

Iran’s private sector has not been a player in the oil trade except once, under ultraconservative President Mahmoud Ahmadinejad, when private sector, as well as security organizations such as the police were allowed to sell oil in international markets, as proxy to the embattled Islamic Republic of Iran .

The result was a total fiasco. The level of corruption and mismanagement involved in this enterprise was unprecedented in modern Iranian history. The ensuing judicial cases that followed this major attempt to circumvent sanctions, continue five years after Ahmadinejad left office.

The complicated operation involved money laundering in several countries in Central Asia as well as elsewhere including Turkey, the United Arab Emirates, Malaysia and even the United States.

Several individuals had to stand trial in Iran, Turkey and the United States for just one of the cases. In Iran, billionaire Babak Zanjani who ran a worldwide network of money laundering is facing death sentence as the government alleges that he has not been able to pay the money he owed to the government as the middle man in oil sales. Zanjani allegedly stole $2.7 billion from oil sales on behalf of former President Ahmadinejad’s government.

But no one knows the real figure or how one person was able to embezzle so much money if he did not have collaborators inside the Ahmadinejad government or security organs.

Tehran may still have to pull more rabbits out of the hat when sanctions are expected to tighten the grip on its financial activities worldwide.

President Hassan Rouhani’s European tour this week and his hope to launch a charm offensive to win hearts and minds and trade partners willing to ignore US sanctions appears to be one of them.

The attempt does not look successful, as Rouhani’s visit coincided with the detention of several Iranians, including an Iranian diplomat in Europe on charges of planning a terrorist attack against an opposition group in exile.