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USD – New challenge in Iran-EU relations

Iran’s Foreign Ministry re-affirmed during a joint press conference with the EU High Representative for Foreign Affairs and Security Policy Federica Mogherini that US should pave the path for cooperation of non-American banks with Tehran, adding that Washington should do more to remove obstacles to Iran’s banking system.

A day before, Valiollah Seif, the head of Iran’s Central Bank, accused the US and the EU of failing to honor the Joint Comprehensive Plan of Action (JCPOA) by keeping Iran locked out of the international financial system.

“In general, we are not able to use our frozen funds abroad”, Seif said Apr. 15 at the Council on Foreign Relations in the US.

During last months, tens of deals were sealed between Iran and European companies, but about all of them were memorandum of understanding, yet to become the legal contracts.

The major obstacle is the remained American financial bans on Iran which make difficult putting investment in this country.

Washington says that providing the access of Iran to the American financial system has not been included in JCPOA.

Recently, Mohammad Reza Sabzalipour, chairman of Iran World Trade Center, told Trend April 12 that Iran will not be able to resume fruitful economic ties with leading European countries if its trade relation with the US is not normalized.

The 27 members of EU’s exports to Iran has decreased from above $10 billion in 2011 to around $6 billion a year after imposing the western sanctions on Iran in 2013.

The current figures show no meaningful change despite the lifting of sanctions in January 2016.

Once, EU was consumer of 800,000 barrels per day of Iranian oil, but currently, only France’s total intakes are about 160,000 per day of Iranian oil and negotiations with other companies from Italy to Greece haven’t reached any result.

The Asian market may absorb Iranian oil, like what has happened during last months, but the Western markets and oil based deals on USD are important for Iran.

Iran has doubled oil exports to 2 million barrels per day in April year-to-year, but the country needs immediate investments and western technology to keep the production up.

About 80 percent of Iran’s oil fields are in their second half life and loses around 8-12 percent of their output.

Iran also has plans to build LNG plants to export gas to European and Asian markets. Without cooperation with Western companies, there is no chance for Iran to go ahead.

Source: Trend