A senior International Monetary Fund official expressed optimism about Iran’s ability to increase global confidence in its economy Wednesday, after months of international reluctance to invest and trade there despite sanctions relief from the Iran deal.
“They are attempting to restore confidence where sanctions removal is creating opportunities,” said David Lipton, the IMF’s first deputy managing director, during an event at the Carnegie Endowment for International Peace. “They want to and are trying to open accounts with foreign banks.”
Businesses have been wary to invest in Iran due to sanctions that are still in effect, as well as the Islamic Republic’s history of money laundering and financing terrorism. Secretary of State John Kerry has been campaigning to promote investment in the Islamic Republic after Iranian complaints that the nation was not experiencing the full benefits of sanctions relief.
Lipton, who met with “reform-oriented” officials during a visit to Iran in May, praised state efforts to respond to criticism from the Financial Action Task Force (FATF), an intergovernmental financial watchdog that has had Iran on its so-called blacklist. FATF temporarily suspended
“The Central Bank is dedicated to creating an anti-money laundering, countering financing [of] terrorism supervisory regime,” Lipton said. “They have passed a counter-terrorism financing law. It’s not perfect, but it’s a start.”
He said that the Central Bank’s supervisory regime would give confidence to foreign companies looking to do business with Iran, though he did not deny that the country might continue engaging in illicit activities.
“What the Central Bank is dedicated to do is to have a regime in which there will be both legal consequence and enforcement capability, to make sure that banks are not involved in [illicit activity],” Lipton said. “And that … would at least create some basis for foreign banks to have confidence that they can do due diligence about their customer and know what kinds of dealings they’re in.”
European businesses, in particular, are curious about doing business with Iran, he said.
“Europe is interested in this reintegration. European business is interested in participating,” Lipton said. “There’s a bit of a buzz about Iran right now. That doesn’t mean that people are ready to act. I think they aren’t. But I think they are ready to go and suss it out.”
The Obama administration has shown similar interest in trade with Iran, celebrating a potential deal worth billions between Chicago-based Boeing and Iran Air.
Members of Congress have expressed concern over such aircraft deals, however. Representative Brad Sherman of California urged Kerry, Treasury Secretary Jacob Lew, and Commerce Secretary Penny Pritzker to “deny licenses to sell aircraft to Iran” in a letter Wednesday.
“In addition to support for Assad, Iran has a penchant for direct sponsorship of terrorism. At times, the Iranians have found it convenient to use civil aircraft to assist in these operations,” Sherman wrote. “Until Iran gets out of the business of supporting terrorism and supporting Assads regime in Syria, the United Stales should not license the sale of aircraft to Iran Air.”
“It is virtually certain that Iran Air will use these aircraft for nefarious purposes,” he wrote.
Experts have also urged caution about engaging with Iran, even after FATF lifted countermeasures against the country.
“Businesses should make no mistake about Iran’s commitment to use terrorism as it wishes. The Obama State Department recognizes Iran as the world’s leading state sponsor of terrorism,” wrote Mark Dubowitz, executive director of the Foundation for Defense of Democracies, and Toby Dershowitz, FDD’s vice president for Government Relations and Strategy. “Bankers should beware of getting too close, too quickly, to a country with a long rap sheet of financial crimes.”
