On 20 January, the EU and the US suspended certain sanctions against Iran for a six month period after the International Atomic Energy Agency confirmed that Iran had taken the required measures agreed upon in a Joint Plan of Action between Iran and the P5+1 (US, UK, France, Russia, China and Germany). The agreement was concluded in November last year. The suspended EU sanctions include prohibitions on the provision of certain services in relation to Iranian crude oil sales to existing customers, on trade of Iranian petrochemical products and on the provision of vessels to transport crude oil and petrochemical products.
Moreover, restrictions on the Central Bank of Iran were eased and the thresholds for authorising financial transfers increased. However, significant UN, EU and US sanctions remain in place. Current EU sanctions include prohibiting the export of certain technological goods and services, the blacklisting of hundreds of Iranian companies and individuals. Moreover, the restriction on supplying specialised financial messaging services, which are used to exchange financial data, remains unchanged as well.
Impact on country risk
For the time being, the Credendo Group remains off cover on Iran, taking into account the sanctions that remain in place and the temporary nature of the suspension of the sanctions. In fact, the current suspension of sanctions will initially only last for a period of six months. Even though this period could be renewed “by mutual consent”, the parties involved need to agree on a final and comprehensive solution before the temporary nature of the sanctions suspension becomes more permanent. A final agreement is not guaranteed at all. Despite the rapprochement, hardliners in both Iran and the US could still derail the current process. As it was announced last November that “nothing is agreed until everything is agreed”, a failure to agree on a final agreement would reinstall the suspended sanctions. This could result in an even more severe sanctions regime and affect future Iranian payment morality.
Analyst: The Risk Management Team, email@example.com