Home World Embargo: Europe prepares to reach out to Tehran

Embargo: Europe prepares to reach out to Tehran


A top American official had made the trip. On November 15th, the US Embassy in Paris will host a reception with representatives of several French companies. The mistress of ceremonies is Sigal Mandelker, she is under-secretary for terrorism and financial intelligence in the Treasury Department. Its portfolio includes the Office of Assets Control (OFAC), the "Foreign Assets Control Office", which everyone names by its acronym, as if it were a common name.

Ofac terrifies companies and institutions around the world: the organization checks compliance with embargoes decreed by Washington. This is the reason for Mandelker's arrival in mid-November. After passing through London, and before going to Berlin and Rome, she is in Paris to explain to the French what the United States expects of them, a few days after the return of the sanctions against Iran, in violation of the nuclear deal signed in 2015 by the major powers and Tehran.

"His speech was meant to be educational, says Joel-Alexis Bialkiewicz, managing partner of the French bank Delubac, one of the last to accept transactions related to Iran. She made a list in the Prévert of the misdeeds of Iran and presented the sanctions and their scope. " Those who try to pity him by exhibiting the share of their turnover dependent on the Iranian market are being snubbed.


The tour of Mandelker's European capitals, at that time, is anything but harmless. Attached to the Vienna Agreement, Europeans have vowed to do everything they can to save it. Bravaches, they drew a proposal at the end of the summer: to create a financial mechanism protecting actors who wish to trade with Iran, despite the sanctions. This assembly complex today appears as the ultimate chance to save an agreement more threatened than ever, while years of negotiations had been necessary to conclude it.

The Special Purpose Vehicle (SPV) was first mentioned in September by Federica Mogherini, the head of European diplomacy, in a joint statement with Iran's Foreign Minister Mohammad Javad Zarif. It announces the introduction of"a legal entity to facilitate legitimate financial transactions with Iran ", anticipating the return of the US embargo against Iranian oil and gas. Embargo that ends up arriving on November 4, unlike the SPV, which still does not exist today. Sign of a certain embarrassment, neither the Ministry of Foreign Affairs nor the Directorate-General Treasury, Bercy, have responded to our many requests for maintenance on the subject.

On January 24, the French Minister of Foreign Affairs assured senators that he would be "Implemented in the coming days", adding that an important meeting had been held in Brussels earlier this week. After months of waiting, the declaration of Jean-Yves Le Drian appears especially as a new pledge given to the Iranian side, which no longer hides his impatience. "It's like the abominable snowman. Everyone is talking about it, but no one has seen it, an Iranian official quipped. "The pressure is increasing, the anti-Western and conservative media are showing a growing nervousness because of the time taken to set up the SPV", observes from Tehran the Franco-Iranian business lawyer Baki Maneche. Even the Iranian government has started. In early January, Mohammad Javad Zarif estimated that "The Europeans had made efforts, but had not advanced as much as hoped."

Disaster scenario

Another senior official went further. "The Europeans had the opportunity to fulfill their commitments, especially on the SPV. This opportunity comes to an end ", warned the secretary of the Supreme National Security Council, Ali Shamkhani. For the first time, he hinted that Iran could in turn no longer respect the agreement. A worst-case scenario: the Islamic Republic could potentially resume its enrichment activities, thus increasing tensions in a region already traversed by crises.

So far, the agreement was based on a market. On the one hand, Tehran limited its production and the amount of fissile material retained on its soil – the Islamic Republic has held, according to the controls carried out by the International Atomic Energy Agency. On the other, Westerners were lifting sanctions. Donald Trump's unilateral decision to reimpose measures targeting the Iranian economy last May broke the equilibrium. Tehran lost the counterpart. Hence the idea of ​​France, Germany and Great Britain to create a mechanism to allow the continuation of trade, through a system of barter.

Several models of SPV have been imagined. The main difference concerns the nature of the products: is it property sanctioned (oil of course, but also precious metals, automobiles, etc.) or "lawful" trade, because not directly targeted by the United States ? The initial promise was naturally that of an "integral" SPV, covering oil exports. The structure acting as a clearing house would allow Iran to sell its oil to Europeans, in exchange for goods produced in Europe, all via the SPV. Ofac quickly showered Iranian hopes and calmed European ambitions by saying that barter, or similar, would fall under sanctions, even without financial transactions.

"Pistachios, rugs and saffron"

The idea of ​​a "light" SPV then made its way, according to several sources consulted by the French authorities. "The mechanism would only be used for products not subject to sanctions, so pistachios, carpets and saffron, summarizes the lawyer Baki Maneche. It would be a simple accounting book, without any act of commerce or financial transfer. " An essentially symbolic creation, to testify to the good will of the European capitals. In a surprising turnaround, Jean-Yves Le Drian resuscitated Thursday the most ambitious model. "The SPV will allow Tehran to benefit, in euros, the financial returns of its oil resources and buy from the main players to buy essential products", he told the Senate Foreign Affairs Committee.

Whatever the model, it should be hosted in France, with a German leader at its head, according to European sources cited in a recent report of the International Crisis Group. Multiply the states directly involved hardens the mechanism. In case of retaliation, Washington will have to target two countries. "Germany is more cautious than France, it fears for its car exports to the United States, testifies an actor involved in the implementation. France is very motivated on the SPV because it was well placed on the Iranian market, and it is quite rare. "

Scrupulous respect, if not zealous

The SPV will not solve everything, far from it. The record fine inflicted in 2014 on BNP Paribas – almost 9 billion euros for several embargo violations, including Iran – has left its mark. Banks now play caution, theover compliancethe scrupulous, if not zealous, respect of the rules published by Ofac. Only a handful of the Old Continent still accepts transactions related to Iran. One of them, the EIH Bank, which is governed by European law but financed by Iranian capital, has recently been added to the list of institutions sanctioned by Washington. Disconnected from the Swift system, it is almost paralyzed.

In France, only Wormser Frères and Delubac remain, although the former has largely reduced its activity. "There is a niche between" compliance " [la conformité avec la loi, ndlr] and "over compliance", philosopher in his jargon Joel-Alexis Bialkiewicz. Delubac only transacts in sectors authorized by the United States, he says. For the moment, only in the agricultural and medical fields. "Each operation requires between one and 48 hours of work before validation. The insured service is tailor-made, continues the leader. And billing accordingly. Staying on a small parcel of the Iranian market has a cost, for a very lean gain, on both sides.

Pierre Alonso




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