A new Swiss payment channel should enable companies to deliver medication to Iran despite the American sanctions. The initiative is coordinated with the United States, but experts are skeptical as to whether it can solve the fundamental problem.
Medicines have become scarce in Iran since the USA imposed new sharp sanctions. Humanitarian organizations have been complaining for months that US financial and trade restrictions hamper the delivery of essential medicines and medical devices. Nevertheless, Washington takes the view that any shortages have nothing to do with the sanctions. With the approval of a new Swiss initiative to facilitate trade in humanitarian goods, the United States now implicitly recognizes that there is a problem.
The Swiss Humanitarian Trade Arrangement (SHTA) is the first to offer an officially approved payment channel for Swiss companies to do business in medicines, food and other humanitarian goods. The mechanism, which was launched by the State Secretariat for Economic Affairs (Seco) in cooperation with the Treasury in Washington, is scheduled to start operating in a few weeks. There was a first trial run at the end of January.
Fear of “secret service instrument”
Novartis drugs worth 2.3 million euros were delivered to Tehran. The payments are processed via the Geneva Banque de Commerce et de Placements (BCP), as announced by the Seco. On the Iranian side, only financial institutions that are not subject to the secondary sanctions of the USA are involved. Before the transactions, “detailed information” about the business and the partners involved would be sent to the US Treasury Department.
Iranian companies fear that the US could use the new mechanism to collect information about the partners involved. Ali Vaez from the International Crisis Group also points out that the program will not be successful if Washington uses it as an “intelligence instrument”. In principle, however, it is a “very valuable initiative, since it is the only operational channel that has received the green light from the US government”.
Glad for every tablet for the Iranians
Switzerland has often acted as an intermediary between the United States and Iran. Since the termination of diplomatic relations between Tehran and Washington due to the occupation of the American embassy in 1980, the Swiss diplomats have represented the interests of the United States in the Islamic Republic. The new payment channel, which has been working on since the end of 2018 and approved by the Federal Council at the end of January, is also part of Switzerland’s humanitarian tradition.
However, the expert Vaez points out that the SHTA can only be used by Swiss companies and can hardly remedy the shortage of medicines and medical devices in Iran. Human Rights Watch warned last October that American sanctions were threatening the health care of millions of Iranians, as they could lead to life-threatening bottlenecks in drugs for cancer, epilepsy and other diseases.
Humanitarian goods are officially exempt from sanctions. However, sanctions against the banking sector make it difficult to do any kind of business. Many western companies also shy away from contacts with Iran for fear of violating American punitive measures. In addition, many Iranians are less and less able to afford expensive specialty medicines due to the decline in the currency and the rise in inflation.
Against this background, the German member of the Bundestag, Omid Nouripour, welcomes the Swiss initiative. «I am happy for every tablet that comes to Iran. So far, however, the initiative has been rather symbolic, »says the Green politician, who maintains intensive contacts with Iran and has long been critical of American sanctions policy. «To remedy the lack of medication, regular trade would have to be allowed again. Aid deliveries are not enough. »
No alternative to the European Instex mechanism
Nouripour cannot see a rethinking of the USA in terms of sanctions policy. However, the Americans apparently understood that “the humanitarian impact of their policy of maximum pressure is so serious that it threatens to fall on their feet,” says the German parliamentarian. The United States could not present itself as a friend of the Iranian people, at the same time impose an entry ban on Iranians and pursue a sanctions policy that primarily affects ordinary people.
Economist Esfandyar Batmanghelidj sees the US approval of the Swiss payment channel as an implicit admission that the sanctions also affect the trade in humanitarian goods. It is arguably the first time that the US Treasury Department has given a foreign institution a written assurance for a transaction, even though it is actually exempt from sanctions, Batmanghelidj writes in a Bloomberg opinion.
In spite of the new Swiss initiative, the activation of the European payment channel Instex is urgently required for Nouripour. Unlike the SHTA, the mechanism set up by Berlin, Paris and London aims to undermine the American economic blockade. “While the SHTA is working with the consent of the USA, Instex should circumvent the sanctions,” says Iran expert Vaez. The transactions at the SHTA were also carried out via regular banks, while Instex was an exchange where money did not flow directly to Iran.
Despite months of preparation, Instex has not yet been officially activated, but political circles in Berlin say that the first transactions have already been completed. Instex is by no means dead for Nouripour. “On the contrary, the countries are lining up to join,” says the MP. The accession of six countries at the end of 2019 is clear evidence of this. The mechanism is not just about trading with Iran, Nouripour says, but about the much bigger question of whether it is possible to do business outside the US-controlled financial system.