Sputnik - As US sanctions dig into the Iranian economy, with more on the way, Iran is compensating in a variety of novel ways, including a foreign investment fund that will give it access to technology that is becoming hard to come by.




On August 7, the US reimposed the first round�of economic sanctions against�Iran since�it withdrew from�the Joint Comprehensive Plan of�Action (JCPOA) in�May, a multinational agreement hammered out�in 2015 to�remove previous sanctions on�the country in�exchange for�very strict limits on�its nuclear program, designed to�block Iranian access to�a nuclear weapon.
While the US, claiming Iran had violated the agreement, unilaterally withdrew in�May 2018, and US President Donald Trump promised to�hammer out�a new agreement, the rest of�the JCPOA signatories�� the UK, France, Germany, Russia and China�� remain unconvinced and have shown increasing reluctance to�follow the United States' demands that they divest from�Iran and cease buying Iranian exports.


Still, the shadow of�US foreign policy stretches very far, and Tehran has taken to�a variety of�methods to�ensure its economy and its people continue to�have access to�what they need, despite�US attempts to�block them. The Iran Foreign Investments Co (FIC), an entity owned by�the Iranian government, plays a key role in�that effort, buying up�assets that will give Iran access to�services, goods and cash accounts it is at�risk of�losing due to�sanctions.
The fund's investments and cash accounts in�22 countries total $5 billion, the Wall Street Journal reported Sunday, and include such diverse assets as�a French medicine factory, an Afghan trading house, a Brazilian auto-parts plant, a German pipeline company and stakes in�several companies that the Iranian government hopes it can either sell for�cash or bargain away for�other benefits, the WSJ reported.


For example, a medicine factory in�Plancy-L'Abbaye, in�France's Champagne region, will provide Iranians with�medicine for�tuberculosis, bladder cancer and a host of�other illnesses, which US sanctions aim to�block. A Dubai-based asset gives the fund access to�power generation equipment, the WSJ noted.

Another possibility for�Iranian foreign investment is their regional neighbor and ally, Syria. The Asia Times reported that a delegation of�Iranian investors and manufacturers paid Syrian President Bashar al-Assad a visit last month to�talk about�post-war reconstruction possibilities, as�the civil war in�Syria seems to�be entering its final stages.
"Their aim is to�make Iran independent" from�sanctions, a fund adviser told WSJ.


However, the US is working to�track down�these investments and block or put pressure on�other partners or national governments to�end Iran's relationships with�them. For example, Iran lost access to�dividend payments from�a Namibian uranium mine in�which it owned a 15 percent stake in�2010 on�the grounds that Anglo-Australian mining giant Rio Tinto feared the production could wind up�helping Iran's nuclear program. Another more recent setback came from�the US reinstituting a ban on�selling Iran airplanes last month, which blocked its ability to�purchase planes from�a Brazilian Thyssenkrupp plant in�which the FIS owned a 40 percent stake.

Facing Toward the JCPOA

While the previous round�of international sanctions on�Iran, which ended when the JCPOA went into�effect on�January 16, 2016, was able to�do serious damage to�the Iranian economy, this time around, it's going to�be a lot harder to�strangle Tehran. EU powers, Russia and China and even regional partners like�Iraq are all taking measures to�lessen the ability of�the US to�block their access to�Iranian goods and markets.
In early July, before�any new sanctions began, Iranian MP Assadollah Qarehkhani announced that a special committee had been formed to�coordinate barter deals with�other countries, in�which Iran would trade oil for�goods or technology it needed.


"We have informed our oil customers that we will only buy their commodities if they buy our crude," Gharekhani said, PressTV reported on�July 4. "The formation of�this committee means that we will make purchases of�goods conditional to�purchases of�Iran's crude oil, and this would limit the impacts of�reductions in�Iran's oil exports [once the sanctions return]."

With Iran exporting 2 million barrels of�oil a day, comprising 40 percent of�the government's annual revenue, that makes oil a powerful tool of�negotiation, but�also an absolute necessity to�keep flowing out�of the country.

"We cannot transfer dollars and euros [for oil sales] into�Iran due to�banking problems," Qarehkhani said. "Therefore, we will import goods from�oil clients such as�India, China and South Korea as�we did during�the previous round�of sanctions."
On August 20, Reuters reported that Zhuhai Zhenrong, China's state oil trader, and Sinopec Group, Asia's biggest refiner, would continue to�buy Iranian oil once the US ban goes into�effect on�November 4. However, the arrangement requires that Iran's National Iranian Tanker Co (NITC) deliver all the oil itself, meaning Iran will cover all the costs and risks of�delivering the crude, as�well as�handling the insurance, sources told Reuters at�the time.


Escaping US Financial Dominance

Further, on�September 4, France and Germany, two other JCPOA adherents, announced a possible alternative to�SWIFT that could maintain Iranian bank correspondent relationships in�euros, Asia Times reported.

China could also provide a workaround via�its Clearing House International Payment System, an international channel aimed at�building worldwide acceptance of�its currency, the yuan.

"The power the United States has over�its European allies and much of�the world is financially," Peter Lavelle, host of�RT's flagship program CrossTalk,�told Radio Sputnik's Loud & Clear on�August 30, so to�have a major European Union figure discussing alternatives to�the US-controlled SWIFT system "is saying a whole lot," he said.
German Foreign Minister Heiko Maas said in�Berlin on�August 28 that it was "high time we reassess the transatlantic partnership in�a sober, critical and even self-critical way," so as�to "strengthen the autonomy and sovereignty of�Europe in�trade, economic and financial policies," Sputnik�reported.


"It will not be easy, but�we have already begun to�do it. We are working on�proposals pertaining to� payment channels and creating a payment system independent of�SWIFT to�establish a European currency fund," Maas noted.

The minister also wrote in�German newspaper Handelsblatt around�the same time that the EU needed to�create a payment system to�serve as�a "counterweight" to�the US whenever Washington "crosses red lines."

Building a separate system from "the European banking clearance system, SWIFT� is one way to�get around�the US Treasury," Lavelle noted, which is responsible for�implementing US economic sanctions. US lawmakers have been urging their European counterparts not to�try and circumvent sanctions regarding Iran. Lavelle indicated that EU countries are moving to�protect their companies that do business in�Iran, because if they don't, "China and Russia will pick up�the void. Who knows, maybe other countries as�well."

Sanctions Push Baghdad Towards Tehran
An unexpected casualty of�the US' new sanctions has been Iraq, a country the US has worked so hard to�bring under�its control, having invaded the country and waged a decade-long counterinsurgency that killed over�half a million Iraqis.


Ostensibly, Iraqi Prime Minister Haider al-Abadi is more pro-American than�his predecessor, but�Iraq barely lasted a week abiding by�the new US sanctions that began August 7.

"I did not say we abide by�the sanctions. I said we abide by�not using dollars in�transactions. We have no other choice," the prime minister told reporters in�Baghdad on�August 13, Politico reported. He has also sought exemptions from�Washington.
Iraq shares a 900-mile-long border with�Iran, and it is heavily dependent on�Iran for�gas supplies, electricity, water and food. Daily trade in�August hit a record $50 million, according to�Asia Times, so in�the question of�choosing between�the US and Iran, Iraqi politicians must necessarily choose butter over�guns.


Finally, Iranian President Hassan Rouhani is seeking to�build maximum confidence in�Iran�� by�both foreign trade partners as�well as�its own citizens�� as�well as�trim the budget wherever possible by�instituting a wave of�anti-corruption measures, including a bill creating a tribunal aiming to�address reports of�insider currency deals, about�which there has been much public anger.
Last month, the central bank head and labor and finance ministers were all removed from�office by�votes of�no confidence, and Rouhani was forced to�announced that 10 percent of�the country's sovereign wealth fund would be withdrawn to�help combat sanctions, Asia Times reported.