Iran Haggling to Withdraw $351M From German Banks Fearing U.S. November Sanctions

Published July 10th, 2018 - 11:15 GMT
German Chancellor Angela Merkel  (Shutterstock/File Photo)
German Chancellor Angela Merkel (Shutterstock/File Photo)

Iran is negotiating to withdraw €300 million ($3 514 794) in cash from Germany and transfer it to Iran, amid fears of a freeze on its funds in European banks as U.S. sanctions enter into effect next November.

The information came at a time when German Chancellor Angela Merkel said on Monday Germany remains committed to the nuclear non-proliferation agreement with Iran that was rejected by U.S. President Donald Trump, but it was for individual firms to decide if they wanted to invest there.

Speaking alongside China’s Premier Li Keqiang, Merkel said companies, which could risk punitive sanctions from the U.S. if they do business with Iran, must decide for themselves if they wanted to take that risk.

“We remain committed to the nuclear agreement. We think it was well negotiated,” Merkel said, indicating: “there is more that needs to be negotiated with Iran, but we think it is better to stay in the agreement.”

Tehran is seeking to withdraw the funds from the Europaeisch-Iranische Handelsbank AG (eihbank) because it is worried that it could run out of cash when fresh U.S. sanctions against its financial sector take effect, Bild newspaper reported.

Negotiations to get millions out of the European-Iranian Commercial Bank in Hamburg are taking place between senior representatives of the office of the Chancellor, the foreign Ministry and Finance Ministry, and senior representative of the Central Bank of Iran Ali Tarsali.


 



It is planned that the Bundesbank will remove £300 million and will give the money to the representatives of the Iranian authorities, after which it will be transported from Germany to Tehran aboard an Iranian aircraft.

Iran told the German Financial Supervisory Authority (BaFin) it needed the cash from the accounts “to pass on to Iranian citizens who require cash while travelling abroad, given their inability to access recognised credit cards,” Bild said.

BaFin was now reviewing the request, which had been briefed to senior officials in the chancellery, foreign ministry and finance ministry, the newspaper reported.

The finance ministry had no immediate comment. The Bundesbank, BaFin and the foreign ministry declined to comment. 

Also, a spokeswoman for eihbank declined to comment, citing bank secrecy laws.

German Finance Ministry spokesperson stated that this is the first time such a case has been examined. For his part, a spokesman for the German Foreign Ministry said that part of the review concerns whether there are violations of the sanctions through this procedure.

U.S. and Israeli intelligence agencies fear the money could be used to fund armed groups in the Middle East, but German government officials said they had no indications of such plans, Bild reported.

United States has given companies operating in Iran, including Europe, until November to withdraw from the Iranian market or else it will also face U.S. sanctions. Washington has also called on Iranian oil-importing countries to halt imports by November.

The remaining Western European countries, UK, France and Germany, as well as Russia and China have tried to provide economic incentives to Iran to urge it not to withdraw from the deal.

Representatives of these countries met in Vienna a few days ago and made an offer to Iran, which Tehran said was insufficient.

Germany’s foreign minister Heiko Maas said on Friday world powers would not be able to fully compensate for companies leaving Iran due to new U.S. sanctions, but warned Tehran that abandoning its nuclear deal would cause more harm to its economy.

“We will not be able to compensate for everything that arises from companies pulling out of Iran,” Heiko Maas told reporters before a round of talks among the remaining parties to the deal.

Iranian MP Mohammad Dahqan was quoted by the Fars news agency saying that the German government seized a portion of Iran’s foreign exchange assets due to the threat of new U.S. sanctions against Tehran.

"After the U.S. withdrawal from the JCPOA, it seemed wrong to trust Europeans," Dehqan said, according to Fars news agency.

However, Iranian Foreign Ministry rejected reports about blocking part of Iran’s assets in Germany. Iranian Foreign Ministry Spokesman Bahram Qassemi said that the claims on blocking Iranian assets in Germany is a psychological war aimed at undermining the ties between Iran and the European states.

Earlier this year, Iran’s central bank, Bank Markazi, has filed a suit in Luxembourg against Deutsche Boerse’s Clearstream unit seeking to recover $4.9 billion in assets plus interest. Clearstream froze the assets on suspicion of terror financing.

Meanwhile, U.S. ambassador to Germany, Richard Grenell, is trying to attract small and medium business to enter U.S. market rather than the Iranian. He triggered harsh criticism after tweeting “German companies doing business in Iran should wind down operations immediately.” 

However, Grenell seems to have changed to a softer approach to his host country than it first appeared. He began engaging business executives with an offer to help them tap the much larger and lucrative U.S. market, according to people briefed on the talks, according to Politico. The Ambassador met with the German Chambers of Commerce and Industry and about a dozen companies to make his pitch.

Some 10,000 small and medium-sized German companies have been investing in Iran since the nuclear deal in 2015, in addition to large companies such as Siemens and Daimler. 

The German government is trying to provide guarantees to these companies so as not to withdraw from the Iranian market in face of US pressure and fears of sanctions. But economists expect the withdrawal of the bulk of companies operating in Iran, especially those that have a chance to the U.S. market, which is larger and more important than the Iranian market.

 

This article has been adapted from its original source.


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