Economists believe US sanctions against Iran are stifling drug imports

ISTANBUL – New sanctions imposed by the United States on Iranian financial companies, including a bank that until recently managed most of the payments for imports of Iranian humanitarian goods, have a deterrent effect on foreign companies that provide medicines and other medical products, economic analysts say.

The trade in humanitarian goods is authorized by US sanctions, in accordance with Treasury Department guidelines, allowing Iran to import food, medicine and medical devices without penalty.

But large-scale sanctions imposed on Iranian financial firms reimposed two weeks ago could jeopardize the flow of humanitarian goods, foreign banks and external suppliers abandon trade relations with their partners in Iran, warn analysts and experts . In recent months, some European banks have refused to process payments, even from Iranian companies exempted from sanctions for fear of US sanctions, according to people familiar with the transactions.

Observers say the number of European and Iranian banks conducting such transactions has decreased. The refusal to process payments has alarmed Iranian importers. Some fear that transactions with external banks may be completely interrupted, leading to a shortage of essential goods, including medicines.

"You simply do not know when other parties will be added or targeted. What was true yesterday may not be this afternoon, "said Alan Enslen, an international trade lawyer at Baker Donelson in Washington, explaining how companies assess risk.

The Trump administration imposed an almost total embargo on the Iranian economy this month as part of a "maximum pressure campaign" to force Iran to abandon its ballistic missile program and reduce its support for militant groups such as Hamas in Gaza and Hezbollah in Lebanon. The sanctions – which were lifted in 2016 after Iran signed a nuclear deal with the United States and other world powers – are targeting projects ranging from oil sales ship building, shipbuilding, in violation of the provisions.

The Treasury Treasury Bureau, known as OFAC, has blacklisted a number of Iranian banks that meet the criteria set out in the decrees, linking companies to terrorism or the proliferation of weapons of mass destruction.

Iranian bank employees handle customer inquiries at a parish bank in Tehran. (Behrouz Mehri / AFP / Getty Images)

Last month, the administration imposed sanctions on Parsian Bank, one of the most reputable private sector institutions in Iran, for which Ofac claimed to be a support to a related investment company, by through another company, to the Iranian paramilitary Basij Resistance Force. The investment company took advantage of the shares it bought from Parsian Bank, according to OFAC, which then directed them to Basij network executives.

Political analysts and sanctions experts, however, say that Parsian has handled a large part of Iran's humanitarian business transactions and that European companies trust him. It is one of the few Iranian banks whose anti-money laundering procedures are in line with international standards, said Esfandyar Batmanghelidj, an expert on trade relations between Iran and Western countries.

"It was like fetching Citibank. It was also important, "said Batmanghelidj, co-founder of the Europe-Iran Forum, an annual conference to promote trade between Iran and Europe.

"The way the Parsian was appointed suggests that other banks could also be targeted at some point, so you run a sudden risk," he said. "Companies that know they can trade with Iran are now struggling to find a bank, to offer the services of this bank and to maintain their business knowing that any time, this channel can be closed. "

The Trump administration insists it does not target or prohibit humanitarian trade with Iran and that US actions are aimed at persuading the Iranian government to "change behavior" and return at the negotiating table for a more comprehensive agreement.

Trump announced in May that the United States was ending its participation in the 2015 nuclear deal, which is slowing Iran's nuclear program in exchange for significant sanctions relief. The administration said the agreement did not go far enough in Iran's nuclear weapons program, although the country continues to respect its restrictions, according to the International Atomic Energy Agency.

"It is not in the US that it is incumbent upon identifying safe channels" for humanitarian trade, said Brian Hook, the state department's special envoy for the United States. Iran, during a briefing with reporters this month. "It is the responsibility of the Iranian regime to create a financial system in line with international banking standards to facilitate the provision of humanitarian goods and assistance."

"The regime's attempts to misinterpret these humanitarian exemptions are a pathetic effort to deflect its own corruption and mismanagement," he said at an upcoming briefing, while the harshest sanctions in the United States had entered into force. "The scheme has enough money to invest in its own people.

One of the concerns of Iranians is whether they will be able to continue to import drugs and advanced equipment used to treat chronic diseases.

Last week on Twitter, Iran's Foreign Minister Mohammad Javad Zarif posted letters from four European pharmaceutical companies announcing the end of their activities in Iran. Iran has its own pharmaceutical industry, but imports some of the raw materials needed to manufacture drugs.

Employees in the Iranian pharmaceutical industry said in interviews that companies had already been forced to switch banks to pay for their drug imports and some of them had to downsize and pay their salaries.

"Many companies have started to limit their activities and lay off employees," said an Iranian employee at the local subsidiary of the German pharmaceutical giant Bayer AG. She added that her company was struggling to transfer money to pay for imported drugs.

"We were working with the Parsian Bank, but we have not made any payments since November 4," she said, adding that Bayer Iran was planning to transfer its activities to the much smaller Hekmat Iranian bank. The employee requested anonymity because she was not allowed to speak to the media. "The problem is that foreign banks have to accept the risk" of working with less well known financial companies in Iran, she said.

According to Enslen, a lawyer specializing in international trade, general licenses for food products and medicines are still available under sanction and Iranian banks facilitate these transactions.

"The US government does not want to target humanitarian trade, but to achieve its objectives, which are strong and bold goals, it will not sacrifice its true objective," he said. "I do not think it's a diabolical plot to exclude humanitarian trade. But that will not prevail at all costs. "

Even before US sanctions were reimposed, inflation and the decline of the currency had led to higher prices for goods such as food and medicine in Iran.

Sarah, 30, lives in Tehran and is buying prescription drugs from her elderly father, who she says is suffering from age-related macular degeneration, an incurable eye disease. She refused to give her full name to discuss more frankly the situation of her family.

His father took Bausch & Lomb PreserVision eye supplements in Canada, which cost about $ 7 in Iran. Earlier this year, Sarah said they had disappeared from the market and she found them, they were sold for $ 70.

"All prices have gone up and we can not find a lot of products," she said. "Sometimes drugs can only be found on the black market, which is getting bigger every day."

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