On November 24, an interim agreement on Iran’s nuclear program was concluded between Iran and the P5+1 (US, UK, France, Russia, China and Germany). Under the interim agreement, Iran is only allowed to enrich uranium up to 5 per cent and the country needs to allow widespread inspections by the International Atomic Energy Agency (IAEA). In exchange, a number of international sanctions will be suspended. French foreign minister Laurent Fabius announced that the EU will ease sanctions against Iran in the course of December, though he said the relief would be reversible.

Impact on country risk

Delcredere | Ducroire and Credimundi, members of the Credendo Group, are off-cover on Iran since 2010.
At that time, international (UN, EU and US) sanctions against the country were increasing due to the nuclear program of Iran, which was suspected of developing nuclear war capacity. Since then sanctions have only become more restrictive, including EU regulations that, among others, put restrictions on financial transactions to and from Iran. The interim agreement represents a major step forward and should lead to the easing of international sanctions. However, it is only a first step and sanctions relief will remain limited and reversible. Under the interim agreement, EU sanctions will be eased for Iran’s petrochemical exports and the gold and precious metals trade. Moreover, the EU announced it would increase the authorisation thresholds for transactions for non-sanctioned trade and establish a financial channel to facilitate humanitarian trade. However, for more substantial sanctions relief (including lifting sanctions against Iran’s Central Bank), a more comprehensive agreement will probably be required. The conclusion of such a final agreement could last another year and a successful outcome is not guaranteed. Therefore, an official removal of sanctions will be required before there can be any consideration to resume cover.

Analyst: The Risk Management Team, s.vanderlinden@credendogroup.com