Sanctions imposed on Iran's financial institutions that curtail the availability of letters of credit (L/C's) appear to be having a big effect on United Arab Emirates- (UAE-) based Iranian merchants.

Meanwhile, the UAE authorities are contemplating closing down more Iranian-owned companies operating there because of their links with Iranian entities.

L/Cs rejected

Executive deputy of the Iranian Business Council, Morteza Msoumzadeh, recently said that sanctions imposed by Washington on Iran's banks and those who deal with them had hit UAE-based Iranian traders hard, according to the Financial Times.

He told the newspaper that since suppliers in Europe and the Far East had rejected his L/Cs, he has had to pay cash up front for his purchases.

"This has taken away around 70 per cent of our business," the Financial Times reports Msoumzadeh as saying.

Investigations

Meanwhile, the UAE is said to be investigating several companies thought to be in breach of sanctions imposed by the UN.

Reports suggest that over 40 companies have been closed down in the last two years as a result of the UN's sanctions and more closures are anticipated as the authorities pursue their investigations.

US sanctions

Sanctions issued by Washington have essentially barred financial institutions in the US from dealing with L/Cs issued, advised, negotiated, paid, or confirmed by banks related to the government of Iran.

But the sanctions affecting L/Cs for Iran have had a much deeper impact since Washingtonhasbeen successful in persuading banks elsewhere in the world, including Europe, not to provide L/Cs for exports to Iran.

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