Wednesday

1st Feb 2023

EU visit to Iran designed to reassure banks

  • Mogherini represented the EU at international talks on Iran's nuclear programme (Photo: eeas.europa.eu)

A high-level EU delegation will visit Iran to reassure international banks on doing business with the Islamic Republic, but officials say they will not have time to meet human rights activists.

EU foreign affairs chief Federica Mogherini will lead a delegation on Saturday and Sunday (16-17 April), which will also include seven EU commissioners dealing primarily with energy, trade and industry.

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  • Renzi (r) met Rohani in Iran earlier this week (Photo: Iranian presidency)

It forms part of a detente following Iran’s implementation of the nuclear non-proliferation deal.

Italian prime minister Matteo Renzi visited Iran earlier this week with a group of 60 business chiefs to sign a series of deals in the oil, gas and transport sectors worth at least €7 billion.

Iranian president Hassan Rouhani also visited Paris and Rome in January. He signed commercial accords worth up to €15 billion on the French leg of the trip.

A senior EU official said on Wednesday that the sheer number of commissioners “is to give a coherent and unified message” of re-engagement.

The official said the trip was designed to “reassure everyone that re-engaging in Iran is possible”.

She said international banks, whose services will be needed to underpin future foreign investment, have been reluctant to return to Iran due to legal and reputational concerns associated with the intricate web of EU and US sanctions imposed in recent years.

The sanctions are being phased out, but some of them, such as an arms embargo linked to Iran’s ballistic missile programme and blacklists linked to human rights abuses are to stay in place.

Ahead of Mogherini's visit, EU states extended a visa ban and asset freeze for a year on 82 Iranian security and judicial chiefs linked to internal repression.

“Thirty three [Iranian banks] have reconnected to Swift so far,” the EU official said, referring to a Belgium-based firm which handles international wire transfers.

“Major banks have not been re-engaging [with Iran], it takes to time to rebuild trust and confidence.”

The Belgian KBC bank, Germany’s DZ bank and Austria’s Erste Group are among the international financiers that have resumed ties. But prior to the detente, US regulators had fined French bank BNP Paribas $9 billion for sanctions-busting.

“They’ve been told Iran is … dangerous to do business with. The European banks are afraid for the same reason,” Iranian businessman Asadollah Asgharoladi told the state run ISNA news agency after meeting a group of Hong Kong-based lenders on 6 April.

The EU official added that “Iran wants to join the WTO [World Trade Organisation] and we are willing to play a supporting role”.

She said the wanted more action “on money laundering and financing of terrorism - a law has been passed in Iran but more needs to be done, because it's an impediment to investors’ engagement”.

With Iran sitting on huge gas reserves that the EU could tap into in order to reduce dependence on Russia, the official said “oil and gas are obvious areas of cooperation”.

She added that the EU had also drawn up a €5 billion plan for modernising Iran’s civilian nuclear energy programme and that it would target other opportunities in Iran’s aviation and rail sectors.

Iran is currently fighting on the side of Russia and Syrian leader Bashar al-Assad in the Syria war.

The EU had previously said that Assad, whose massacres of civilians have prompted huge refugee flows to Europe, must go for the sake of peace.

But Russia’s bombing campaign has made this less likely, while the rise of jihadist group Islamic State in Syria has made Western powers more open to keeping him or his rump state in place for the sake of stability.

The EU official noted that “we have tried to engage Iran when it comes to facilitating humanitarian access [in Syria] - it is not easy”.

She said that Iran was a source and a transit country for refugees because it hosts up to 3 million people who fled Afghanistan.

A previous visit to Iran by Mogherini’s predecessor Catherine Ashton in 2014 prompted anger by Iranian hardliners when she met women’s rights activists at the Austrian embassy in Tehran.

Short visit

The EU official said that this time there would be “no meeting with civil society because it's a very short visit”.

The EU statement on the Iran blacklist noted that it was guilty of “grave human rights violations”.

MEPs and NGOs, such as FIDH and DHRC, wrote to Mogherini ahead of the visit to urge her to pay more attention to the issue.

The FIDH and DHRC noted that despite Rouhani’s reputation as a moderate, the number of executions a year under his watch, including executions of juveniles, has risen to heights not seen since 1989.

They said there are “at least 1,000” people in prison “for purely political reasons or for their human rights activities”. It said dozens of Baha’i followers and Christians were also in prison “solely for their beliefs”.

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