Banks and Iran: Tillerson’s firing muddies the waters even more for investment


Olivier Holmey
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Donald Trump fired Secretary of State Rex Tillerson on Tuesday, the latest sign of his opposition to the Iran nuclear deal, an international agreement that has allowed the country’s banks partial re-entry into global finance after years of sanction-fuelled isolation.

At his first press conference on Tuesday since confirming the dismissal of Rex Tillerson on Twitter, Donald Trump said of the former State Secretary: “We disagreed on things. When you look at the Iran deal, I think it’s terrible, I guess he thought it was OK.”

Trump has repeatedly expressed his opposition to the deal — signed by the Obama administration in 2015 — throughout his presidential campaign and since the start of his mandate.

He has called the agreement, which lifted a number of international sanctions on Iran in exchange for curbs on the country’s nuclear programme, “one of the worst deals ever made by any country in history”.

Tillerson has said the deal, officially called the Joint Comprehensive Plan of Action (JCPOA), was “flawed” and had “weaknesses in it”, but declared that he was in favour of its continued implementation.

“We’re going to stay in,” he told CNN in October.

The dismissal of Tillerson puts further pressure on JCPOA, following a fiery speech delivered in London on February 22 by Iran’s deputy foreign minister, Abbas Araghchi, in which he declared that his country was also considering withdrawing from the deal.

Arguing that the deal had not delivered the banking and business benefits Iran anticipated, Araghchi said: “If the same policy of confusion and uncertainties about the JCPOA continues, if companies and banks are not working with Iran, we cannot remain in a deal that has no benefit for us. That’s a fact.”

Though a number of smaller financial institutions, in Europe and elsewhere, have started to collaborate with Iran’s banks once again, the larger international banks have yet to re-engage with that country, wary as they are of falling foul of remaining US sanctions against Iran and of the reintroduction of sanctions previously in place if any party were to withdraw from the deal.

Araghchi had already made hostile remarks about the nuclear deal earlier in February at a Euromoney conference in Paris devoted to Iranian business. In that speech, Araghchi accused Trump of breaching not just the spirit of the JCPOA, but also its letter, by repeatedly criticising the deal in his public remarks.

To demonstrate that point, Araghchi referred to paragraph 28 of the agreement, which states that the signatories “commit to implement this JCPOA in good faith and in a constructive atmosphere, based on mutual respect”, and that senior government officials from the participant countries “will make every effort to support the successful implementation of this JCPOA including in their public statements”.

Trump’s repeated threats to withdraw the US from the nuclear deal have contributed, businesspeople and Iranian officials say, to a climate of uncertainty that has left international companies and banks that want to work with Iran in a sort of limbo, hesitant to enter a country considered to hold huge economic promise.

Iran is a big market, but one that is largely untapped as a result of years of sanctions.

Even those businesspeople that have decided to engage with Iran often do so discreetly.

Wormser Frères, a French private bank, has become one of the most trusted banking partners to Iranian businesses in recent years. Its chief executive, Alain Wormser, recently told Euromoney that he tries not to publicise that involvement too widely, as he fears it might affect other banks’ perception of his institution’s risk profile.

He says Wormser Frères has decided not to pursue more than 20% of its income from business in Iran, a self-imposed arbitrary ceiling that would be perfectly legal to exceed – purely in order not to be perceived as “Iranian risk”.

Euromoney also revealed in November last year that Indigo Holdings, an investment company focused on buying into Iranian assets, had deliberately excluded any mention of Iran in the official documents ahead of its listing on London-based stock exchange NEX.

Indigo, which was created by Iranian investment bank Turquoise Partners, chose to omit Iran from its public disclosures because it thought that its connection to that country, though legal, could negatively affect its listing.

Tillerson’s dismissal is likely to muddy the waters even more for banks looking to connect Iran to the outside world. His replacement as State Secretary, Mike Pompeo, is known to be an opponent of the nuclear deal and to be generally hawkish on Iranian matters.