Wednesday, March 21, 2012
Financial sanctions against Iran causing difficulties for U.S. companies
Iran has been cut off from not only the U.S. banking system but now through being disconnected from SWIFT is not able to use other global systems. SWIFT is a huge cooperative serving over 10,000 financial institutions and corporations in 210 countries around the world. SWIFT enables users in different countries to facilitate financial transactions.
A recent decision by the EU council to sanction Iranian banks means that SWIFT must disconnect Iran from its system. SWIFT is incorporated in Belgium and must comply with the decision. See this article.
Iranian banks are cut off from the U.S. financial system as well. Large Iranian state companies work around the system using barter and gold but smaller private companies in Iran cannot pay outstanding bills to U.S. and other companies-- at least not through normal channels.
An Iranian company that makes diapers owes American Pulp and Paper based in Washington State, 3.8 million dollars for material already shipped that is used in making diapers. However the Iranian company is blocked from using any of the usual channels to pay for the shipment. There are no sanctions apparently on these goods and also pharmaceutcals. However, Iran will not be able to buy them nor companies sell them because of these payment difficulties.
I just wonder if the use of financial institutions as a weapon against countries in disfavor will not ultimately lead to new financial institutions operating entirely outside of western influence. For more see this article. I would think that some international capitalists might not favor these sorts of actions. Political disagreement is one thing capitalist trade between nations is quite another!