The system, which includes accounts with foreign commercial banks, registered offshore brokers, firms coordinating prohibited deals, and a clearinghouse in Iran, has helped Tehran withstand pressure from the Biden administration to join the 2015 nuclear agreement and buy time for its nuclear development. during the ongoing negotiations. Negotiators say they are close to an agreement, with the release of the Britons in recent days suggesting the deal could be sealed within a few days.
Years of sanctions have crippled the Iranian economy and caused the Iranian currency to plummet. However, the ability to increase trade to nearly pre-sanctions levels has helped revive Iran’s economy after three years of decline, easing domestic political pressure and strengthening Tehran’s negotiating position.
Iran’s success in circumventing trade and financial embargoes, as evidenced by trade statements and confirmed by Western diplomats and intelligence officials, shows the limits of global financial sanctions as the United States and the European Union try to use their economic power to punish Russia for its invasion. to Ukraine. The United States and the European Union banned large Russian banks from trading dollars and euros and froze the assets of the Russian Central Bank held abroad. As a result of these measures, the ruble has lost 13% of its value against the dollar since February 24, when the Russian invasion of Ukraine began. At the same time, the Biden administration sought cooperation with Russia during talks in Vienna aimed at reviving the nuclear deal with Iran.
Iran’s underground banking system operates as follows: Iranian banks that provide services to companies banned by US sanctions due to exports or imports have tasked their affiliates in Iran with running the sanctioned businesses on their behalf. These companies established companies outside Iran’s borders that serve Iranian merchants as intermediaries. These intermediaries trade foreign customers of Iranian oil and other goods or sellers of goods destined for import into Iran in dollars, euros or other foreign currencies through accounts set up in foreign banks.
Part of the revenue is smuggled into Iran by couriers who transport the money withdrawn from the accounts of intermediary companies abroad. However, according to Western officials, a significant portion remains in offshore bank accounts. Iranian importers and exporters trade with each other in foreign currencies on the basis of books kept in Iran, according to the Central Bank of Iran.
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