Cargill, Bunge and other global traders have halted food supply deals with Iran because new US sanctions have paralyzed banking systems required to secure payments, according to industry and Iranian government sources.
“There is no real chance of being paid using the existing mechanisms and many international traders are unable to do new business for the moment,” Reuters quoted one European source with knowledge of the situation as saying.
Several western and Iranian trade sources said US groups Cargill and Bunge, as well as Singapore’s Olam, were among those which could not conclude new export deals for wheat, corn, raw sugar or other commodities because Western banks would not process payments with Iran.
Under the earlier round of sanctions, Iran had turned to a dwindling number of foreign banks that continued to act as a conduit for payments to keep food and other trade flowing. But this time, many of those foreign banking channels are closing down.
Three Iranian officials told Reuters that banking issues were to blame for halting food and other trade.
An official with Iranian Industry, Mines and Trade Industry said only a “handful of small European banks” with no or little interaction with the United States were still doing business with Iran, and they were only involved in small-scale purchases.
“We are in talks with Europeans to expand this network of banks and financial institutions,” added the ministry official.
He indicated that right now, many companies including Cargill and Bunge have informed Tehran about banking difficulties that will force them to stop their dealings with Iran.
Washington says its sanctions are part of an effort to force Iran to curb its nuclear and missile programs, as well as end Tehran’s support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.
Iran insists its nuclear program is only for peaceful purposes and its missiles are defensive.
US sanctions took full effect on Nov. 5, although Washington has issued temporary waivers for some of its allies which depend on imported Iranian oil.
Iran, which relies heavily on imported food staples, has years of experience working around US and other Western sanctions, which were progressively tightened between 2012 and 2015 until Iran reached a deal over its nuclear program. Many sanctions were lifted in 2016 after the pact.
Bankers reported that for many foreign banks, it is easier to end any Iranian activity than try to navigate the US sanctions rule book and run the risk of slipping up and facing penalties.
“There is super caution now,” said a European financial source involved in Iranian transactions in the past, adding rules on food and other humanitarian dealings were complex.
“If goods are shipped for instance to an Iranian distributor, who then sells them on and not directly to an end buyer, banks will increasingly look at such a transaction as commercial rather than humanitarian,” the source said.
Data collected on Dec. 21 from global shipping intelligence platform MarineTraffic showed 16 ships had been waiting to unload cargoes of commodities and goods, including foodstuffs, for at least two weeks at Iran’s ports of Bandar Abbas and Maashour. Four of the 16 vessels had been waiting since October.
This article has been adapted from its original source.
