Banking: How long can Iran hold?
The Trump administration has begun the process of ostracizing Iranian finance. Bankers there are hanging on to some rare good news, but how long will it be till they are back to square one?
In early November, Swift, the financial messaging service used to link thousands of banks around the world, announced that it would disconnect certain Iranian banks from its network. Calling this step “regrettable”, Swift said it had taken it “in the interest of the stability and integrity of the wider global financial system.”
Most observers interpreted the decision as Swift falling in line with the US’s increasingly tough stance on Iran. As recently as February 2016, Swift reconnected a number of Iranian banks to its system after a four-year hiatus, prompted by a tightening of US international sanctions against Iran. History repeats itself, sometimes in short order.
In late November, news emerged that Iran was exploring alternatives to Swift, including a state-backed cryptocurrency. That too may bring back some memories. In recent years Iran’s financial sector has found increasingly imaginative ways to circumvent, and sometimes break, the many crippling sanctions imposed upon it.
This back and forth – the imposition of restrictions on Iran and the ways it finds to get around them – is certainly a well-trodden path for the country’s bankers and one that they hoped they would leave behind with the signing of the Iran nuclear deal in 2015.