A recently formed forum of European and Iranian business leaders has been contemplating the prospects for letters of credit (L/Cs) if financial sanctions imposed on Iran that have been temporarily suspended are eased or lifted.

The future of Iranian sanctions should be clearer after 24 November when the West and Tehran anticipate reaching a deal over the Islamic republic's nuclear programme.

De facto boycott

Participants at the inaugural Europe-Iran Forum discussed the proposition that one unintended effect of sanctions has been a de facto boycott of Iran by companies and banks.

At a London meeting in October, they noted that trading partners and banks were still steering clear of business with Iran, even in transactions for humanitarian goods that are not proscribed by sanctions.

Bank fines

The participants expressed concerns that the recent spate of multi-billion US dollar fines imposed on banks for sanctions violations may have prompted the boycott, and may even protract it, even if sanctions were eased at the end of this month.

A founding member of the forum, Esfandyar Batmanghelidj, suggested that the fines, "spooked banks anew, and Iranian investors realise that even if sanctions are lifted, Iran needs to rebuild its relationships with the international banking community."

Additional concerns

Another participant, founding partner of Avarya Capital Ltd, Amir Ali Amiri said, "any number of good political outcomes may occur" on 24 November.

"But even then," he added, "if European banks continue to lack confidence in putting together a letter of credit for Iran, they're not going to touch the opportunity."

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.