As Iranian, US and European Union officials prepare to hold talks to arrive at a final deal on Iran’s nuclear programme, major shipping companies are still steering clear of the country as a result of the sanctions imposed by the US and the EU.
“Certainly a lot of western shipping lines are avoiding Iran,” said Patrick Murphy, legal director at international law firm Clyde & Co in Dubai. “Overall, the problems with posting security in the event of an arrest and difficulties with the banking sector make it much more difficult for them to do business in Iran.”
The P5+1 group of countries – the US, United Kingdom, China, France, Russia and Germany – signed a Joint Plan of Action with Iran on November 24, 2013, which would provide limited and temporary relief from sanctions, in exchange for Iran’s termination of its nuclear programme and the destruction of its stockpiles. But the potential risks and uncertainty have kept shipping lines away.
Murphy said that, under the sanctions, which were intended to severely weaken Iran’s ability to finance its nuclear activities by restricting its oil exports, major shipping lines cannot carry Iranian petroleum products because no vessels are able to get insurance from any of the international protection and indemnity clubs.
For the situation to improve, substantial changes will need to be made, such as the ability to send money into Iran, says Murphy. “As long as the banking sanctions are in place, none of the major banks in the world want to deal with Iran because they’re petrified of being fined by the US regulators,” he said. “The banks tend to try to over-comply with the sanctions to avoid any accidental breaches and, as a result, shy away from carrying out any business that has even a remote connection with Iran.”
Murphy added that many people are willing to do business with Iran, but that they are adopting a “wait-and-see” attitude as to how the landscape changes.
“Iran is a country of 70 million people, half of whom are under 35, so there will be a big move to tap into that market when it opens up,” he said. “From western consumer goods to the energy industry, I don’t think there’s any major sector that isn’t going to be boosted by the opening of the Iranian market.”
By Jeffrey Lee
Staff Writer | Hong Kong