Risky Business: Iran Never Truly Open for Business, UANI Finds

European Shipping Company Notes Iran’s Failure to Pay, Inability to Retrieve Payment

Late last night, Secretary of State Pompeo rang the final death knell for European-Iran business ties by denying a European request for waivers to the comprehensive U.S. sanctions set to be re-imposed in August 2018. In a letter to the foreign and finance ministers of the UK, France and Germany, Secretary Pompeo stated that the U.S. would seek to exert “unprecedented” economic pressure on the Iranian regime and is not in a position to make exceptions.

French energy giant Total was the latest European corporation with previous Iran business ties to abandon Iran after failing to obtain the necessary U.S. exemption.

While Secretary Pompeo’s letter makes explicit the U.S. goal to maximize the economic pressure on the regime and signals the closure of Iran to European businesses, the reality is that Iran was never truly ‘open for business,’ even during the height of the Joint Comprehensive Plan of Action (JCPOA), due to a number of significant and systematic problems with the Iranian business environment.

“When the decision is made to do business in Iran, a company not only assumes the moral hazards of enriching the world’s leading state sponsor of terrorism and a notorious violator of human rights, it also puts the business itself at risk," said UANI President David Ibsen. "There are few legal protections. The banking system is opaque. And as we have recently learnt, no avenues for redress.”

Last month, Norwegian shipper Skaugen told UANI that its Iranian customers – simply – did not pay. Not surprisingly, the Oslo-based firm had decided to stop making calls to any ports in Iran.

Skaugen wrote to UANI, “the Iranian clients do not try to pay as per agreement and… it is anyhow not possible to receive payment.”

“Iran is ill-equipped to serve the interests of global business,” said Daniel Roth, research director at UANI, “and Skaugen’s experience should serve as a wake-up call to any business still contemplating Iran trade. Besides Iran’s dysfunctional business climate, there’s not much point in doing business if you’re not going to get paid.”

European Union diplomats may still try to protect their firms from U.S. sanctions through a “blocking statute.” But it’s an exercise in futility.

The buck stops with businesses – not bureaucrats. No amount of EU cajoling will persuade company leaders to trade with Iran. As Total clearly understands, it is global businesses – not Brussels – that will be punished with American fines and massive reputational harm when they continue to trade with Iran after the November deadline.