Former Official Says US Preparing To Lift IRGC And Khamenei Sanctions

Faced with an unprecedented level of sanctions on Russia, banks are taking a dim view of business with all Russian entities and dropping clients if there is even a slight doubt on their ties to that country, Reuters quoted bankers and lawyers as saying.

While European and North American governments have introduced serious banking and other business sanctions, countries in Asia and Elsewhere are introducing their own restrictions.

Sanctions experienced by Iran went a bit farther than those announced against Russia, such as cutting off all banks, instead of a select group, and the central bank from the global SWIFT. But the overall psychological and legal impact appear not be too different.

While global banks have extensive experience with sanctions and have invested billions of dollars in compliance programs in recent years, the curbs on Russia are unmatched in their scale, speed and complexity and may yet grow, said executives. Russia was a much larger financial player before the sanctions than Iran ever was.

To avoid falling foul of the rules and having assets and capital ensnared by new curbs, banks are adopting extreme caution in all of their dealings with Russian entities, actions that will likely exacerbate global trade disruptions, said bankers and lawyers.

The United States alone fined banks billions of dollars for breaching its OFAC (Office of Foreign Asset Control) restrictions since 2010. BNP alone was fined $8.9 billion in 2014, while Commerzbank and HSBC were also fined in billion-dollar figures. From 2010-2019, the US took action against 32 banks and all paid penalties.

Many of these cases were related to Iranian sanctions violations, which has made international banks extremely careful in their dealings.

A senior Hong Kong-based Asia trade finance banker with a global lender told Reuters that his compliance colleagues are asking more questions even if a financing deal involves a non-sanctioned Russian entity, directly or indirectly.

The issue is not just current sanctions, but what may still come. "It's not just managing risk from the existing sanctions, but also thinking about what more could possibly happen on that front," an Asian banker told Reuters. "No one would like to sign a billion-dollar trade finance deal only to be told a week later that the entity in Russia has also been added to the sanction list."

There is also the danger of aftereffects even when sanctions are removed. Iran experienced this syndrome when it resolved its nuclear issue with world powers in 2015 and international sanctions were lifted.

From 2016-2018 when most economic sanctions were removed, Iran had a hard time to get major deals and joint ventures. While the country needed tens of billions of dollars in investment, it was able to secure just a few billion dollars.

The fear that a regime is unpredictable and sanctions can be reimposed for new unacceptable actions, will keep the financial sector and corporations away from a country which has emerged from sanctions.

Charlie Steele, partner at Washington-based consultancy Forensic Risk Alliance and a former US Treasury Department sanctions attorney told Reuters, "Banks generally, and certainly the global banks, often tend to be very cautious and conservative with respect to sanctions, especially U.S. sanctions.”

With reporting by Reuters

The visit comes as Russia's assault on Ukraine continued for a seventh day, and as Western countries have rallied together against the incursion.

"Our duty as leaders is to do everything to stop the bloodshed," Bennett said at a joint press conference.

Bennett also said Israel was watching with concern as Germany, Britain, France, Russia and China negotiate to revive the 2015 nuclear deal with Iran, which was left in tatters after the US withdrew in 2018.

He said Israel was concerned the deal would not adequately rein in Iran's nuclear program.

Scholz said he understood Israel's worries, but said it was time to move forward on a deal.

In the decades following the Holocaust, in which Nazi Germany killed 6 million Jews, Germany and Israel have become staunch allies.

The countries' Cabinets hold regular joint sessions, and Germany is Israel's most important trade partner in the European Union.

But Germany, like much of Europe, is at odds with Israel when it comes to the Palestinian issue.

Germany has called for a Palestinian state alongside Israel and opposes Israel's settlement activities in the West Bank. Germany is also among world powers negotiating with Iran over its nuclear program.

Reporting by AP

Sources close to the negotiations have told Iran International that Tehran has demanded western powers ask the International Atomic Energy Agency (IAEA) to drop its requests for information on uranium traces dating to before 2003 in several undeclared Iranian nuclear sites. Analysts have suggested the traces may relate to equipment supplied by the network of Pakistani scientist AQ Khan.

The United States and the three western European countries in the Vienna talks – France, Germany, and the United Kingdom – have argued that they should not ‘interfere’ in any IAEA investigation. Apparently confirming the Iranian demand, the lead British negotiator Stephanie Al-Qaq wrote on Twitter: “Safeguards are a fundamental part of the non-proliferation system and are separate. We will always reject any attempt to compromise IAEA independence.”

Iran has long argued that the IAEA should drop its repeated questioning over Tehran’s past nuclear work, but it is only in recent days that the issue has emerged as a contentious part of the Vienna talks aimed at reviving the 2015 nuclear deal, the JCPOA (Joint Comprehensive Plan of Action).

Rafael Mariano Grossi, the IAEA chief, told reporters Wednesday that such outstanding issues needed clarification regardless of “any other external process,” presumably meaning that he wanted answers over the pre-2003 work regardless of what happened with the JCPOA. But Iran’s view that Grossi’s pursuit of the issue is ‘politicized’ might have encouraged it to raise the matter in Vienna.

Western frustrations

Although restoring the JCPOA would extend IAEA inspections and monitoring of the Iranian nuclear program, the western European powers are showing frustration at the last stages of the Vienna talks.

In Israel Wednesday German Chancellor Olaf Scholz said agreement on reviving the JCPOA "cannot be postponed any longer…Now is the time to make a decision…Now is the time to finally say yes to something that represents a good and reasonable solution."

As Iran International reported Saturday, Iran is also still dissatisfied at proposals to ease United States sanctions in return for Tehran returning its nuclear program to JCPOA limits. Iran’s search for ‘guarantees’ that the US would not once again leave the JCPOA, as it did in 2018, has of late been cited less than disagreements over which US sanctions are incompatible with the 2015 deal.

‘Economic guarantees’

Ahmad Ali-Beighi (Ali-Baygi), a member of parliament, Sunday cited parliament speaker Mohammad-Bagher Ghalibaf (Qalibaf) that “economic guarantees” were part of Iran’s demands. Iran International has also quoted sources close to the Vienna talks that Tehran is seeking the delisting of the Revolutionary Guards (IRGC) by the US, given their economic role, and the removal of the 2019 US presidential executive order allowing the administration to sanction anyone linked to the office of Supreme Leader Ali Khamenei – an order used to sanction then foreign minister Mohammad Javad Zarif and then judiciary chief and now president, Ebrahim Raisi (Raeesi).

Ali Shamkhani, Iran’s top security official, said Monday that “bitter experience” with America had left Tehran with no choice but to seek “guarantees and a balanced agreement.” Mohammad Morandi, advisor to Iranian negotiators in Vienna, told Press TV Tuesday that Iran “can’t be pushed into a bad deal or an incomplete deal or a problematic deal.”

That may be changing. The crisis in Ukraine threatens to impinge on negotiations between Tehran and six world powers – China, France, Germany, Russia, the United Kingdom, and the United States. Exactly how, diplomats are unsure.

Since the Biden administration took office in January 2021, Washington has eased closer to the western European trio (the ‘E3’), while taking part at Vienna only indirectly as the US maintains ‘maximum pressure’ sanctions introduced by President Donald Trump in 2018 on withdrawing from the 2015 deal, the JCPOA (Joint Comprehensive Plan of Action).

There is no obvious fall-out from the Ukraine crisis on the Vienna talks. Mikhail Ulyanov, Russia’s lead negotiator, has continued his generally optimistic videos and pictures on Twitter showing his meetings with the US and the E3.

But there is a general wariness. "There's a good chance that a crisis of this magnitude will pollute not only the Iranian file, but many others," a French presidential official told Reuters."This is one of the many subjects on which the relationship with Russia is very severely, very significantly changed by the behaviour of President Vladimir Putin."

Iran’s Supreme Leader Ali Khamenei Tuesday, in a televised speech, said Ukraine was “another victim” as the “US regime creates crises, lives off of crises and feeds on various crises in the world.” Khamenei emphasised that the “US and western powers could not be trusted.”

Trust, guarantees, interests

One of the biggest challenges in the Vienna talks, which those involved have generally said are nearing their end, is Iran’s search for guarantees, both that the US will not again renege on the JCPOA and that neither the US nor the European powers will restrict Iran’s access to world markets. The US ‘maximum pressure’ sanctions threaten punitive action against third parties buying Iran’s oil or dealing with its financial sector.

Three diplomats close to the talks told Reuters that developments in Ukraine had heightened a sense of urgency in Vienna, to the point that agreement on restoring the JCPOA needed to be reached this week before the atmosphere soured. A senior US State Department official said Friday that Washington still thought Moscow wanted to negotiate JCPOA revival, which the official called a “common interest” of the US and Russia.

But there has also been speculation that Iran might feel its position strengthened by a desire in Washington to avoid a second crisis and to see Iranian oil returning to world markets, given the Ukraine conflict has sent oil above $100 a barrel.

Sanctions

Another complication lies is that Russia, with a renewed JCPOA, would be expected, as in the past, to ship out stocks of Iranian enriched uranium. Tehran now has around 12 times the 208kg limitset by the JCPOA. While US and western European sanctions on Russia remain limited, and far less than sanctions on Iran or Afghanistan, they might increase if the crisis in Ukraine continues.

In the Financial Times Tuesday, Alistair Milne, professor of financial economics at Loughborough university, wrote that the experience of Iran showed that the “curious narrative” of barring Russia from the international Swift bank-messaging system would not lead to “cutting Russian money out of global finance” – and that broader measures, similar to those used against Iran since 2004, would be needed.

The Linda, a crude oil tanker identified in a US Treasury document detailing sanctions against Russia, was in the Indian Ocean and was expected to arrive at Sungai Linggi port on Malaysia's west coast on Sunday, according to data from ship tracking website MarineTraffic.com.

It was not immediately clear whether authorities in Malaysia plan to allow the ship to anchor. Its marine department and foreign ministry did not respond to requests for comment.

US advocacy group United Against a Nuclear Iran (UANI), which monitors Iran-related tanker traffic through ship and satellite tracking, said Linda was transporting Iranian oil transferred from another ship at sea on Jan. 30.

The vessel had loaded crude oil from an Iranian port 10 days prior to conducting the transfer to Linda, UANI's chief of staff Claire Jungman told Reuters, citing satellite data.

The destination of the oil was not known but it could be transferred to another ship off Malaysian or Singapore waters, Jungman said.

Transferring illicit Iranian oil from one tanker to another has been taking place in Mlaysian waters.

According to the United States, Linda is owned by PSB Leasing, a unit of Russian lender Promsvyazbank, which has also been hit by international sanctions.

French authorities on Saturday seized another ship, Baltic Leader, that they said was owned by PSB Leasing.

Reporting by Reuters