Recent US unilateral financial sanctions imposed on Iran are cutting off Iranian banks from the international banking system, making letters of credit (L/Cs) to import medicine and food into the Islamic republic much more difficult to obtain according to a professor who teaches international business at the George Washington University.

In an interview with the Tehran Times, Hossein Askari describes the latest US sanctions on Iran as "an act of war."

No retaliation

Askari says if an Iranian bank wants to open an L/C to import medicine or food it cannot do so unless banks in other countries are willing to stand up to the US by continuing to write Iranian L/C business for essential imports and opposing the most recent US sanctions.

So far European and other financial institutions have been reluctant to do this says Askari, who once served as special advisor to the Saudi finance minister

Cash or smuggling

"Payments in cash will have to replace bank L/Cs" the professor says, adding that because of this Iran will face shortages of food and medicine. "Smuggling will be the best business," Askari concludes.

The Trump administration introduced sweeping new sanctions on Iran's financial sector in October, targeting eighteen Iranian banks that had hitherto not been subject to sanctions.

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