Sanctions are back - Or how to deal with unknown variables

Despite all confirmations of the International Atomic Energy Agency (IAEA) the US have brought back in place the former sanctions, stopped as conditon of the so called nuklear deal. The next round of sanctions of the US administration will start by November 4th and they can become really tricky because they target the financial sector. This means a new aspect in the game ofthe powerful how to deal with US and to find the best strategy to survive. 

Sanctions really best they have?

Political sanctions, as we have learned, never hit the right people. Neither North Korea, nor Russia or even Cuba, the powerfull are not really affected. Full stop delivery of goods like weapons, nuclear stuff or other human rights threatening goods work as it is a full stop approach. And, much more important, no eceonimy needs this goods. Sanctions against all sorts of goods are always problematic for business because a lot of formalities have to be obeyed consequently and that makes all business slow and load them up with effort. But usually they are not this big obstacle as long as ones business is not fully targeted. And even then, with some dual-use business can be made as long as end-user are clear and acceptable. Andmost of the sanctions are, this must also be said, not hitting the usual business. And in case, goods are affected, a country like Iran can afford the higher risk margins, provider will charge and thus keep the standards in the country on level.


Hit on banking - hit the economy

But with hitting the banking system no company has the chance to escape.

This is based on three reasons:

  • every transaction in USD means to become part of the US export control
  • every bigger bank is using SWIFT which can be (Illegally) blocked again as happened in 2012
  • most banks dealing with international transfer capacities are always also active in the US, thus they are also part of the US export control

So it will be very thrilling how to deal with this not so well-thought-out idea from the US administration. If the banks do not allow transfers to Iran because of the named reasons, business is dead. This makes Iranians impossible to reach improvements in all the aspects of modern life. And is US want to bring down the government and install a new one. last years of Arabic sping has shown evidence that this will not happen.


EU support

The EU started to fight back with pulling out the blocking statues, that shall help European companies when they get sued by US administration. Doubts are given that this will work as companies facing problems in US when they are not following US sanctions and having business in US. Or even if there is no direct business in US but customer use the products and sell their products in US will have explicit interest in having every provider following this rules. This would be second, indirect trigger for pushing the sanction in place.  


EU receivable exchange

Only hope we have is based on the European ideas of blocking US sanctions by a official governmental based money or better said receivable exchange. This exchange of debts between countries could cure the problem for all companies, willing ot make business with Iran. It will not help trading companies willing to supply Iranian companies as the manufacturer will demand end-user certificates. This are then the next problematic element we can discuss. But it is a pormising beginning.


We hope for the best but everyone shall prepare for the rest.


Stay tuned


Yours K-Street6 Team