New report on Iran
Uncertainty regarding remaining US-sanctions has had a dampening effect on exports to Iran. There is still no possibility of financing large and long-term export transactions.
Victor Carstenius is EKN’s country analyst for Iran.
It is a year since the easing of sanctions was introduced. What effect has this had on Iran so far?
“The easing of sanctions has given Iran an economic boost. Oil exports have increased considerably and there has been increased growth. At the same time, remaining sanctions continue to hamper trade and investment, and are delaying Iran’s full integration into the international financial system.”
What sort of interest has there been among Swedish exporters?
“During the first six months we were on the telephone every day. What Swedish companies are offering is a really good match for what Iran needs with regard to infrastructure investment. Sweden’s exports to Iran before the sanctions were extensive and there is a great deal of interest in taking up Iran again as a market. But there is a lot of competition, and so far banks are not offering long-term financing due to uncertainty regarding the US sanctions.”
In June 2016 EKN upgraded Iran to a better country risk category. Why?
“Because payment routes had been established by then, and Iran had paid its debts to both EKN and other export credit institutes, the conditions were right for upgrading Iran to country risk category 6 from 7. This means that the risk premium paid by the guarantee holder in order to secure business with EKN goes down.”
EKN has issued guarantees for exports to Iran for around SEK 1 billion in 2016 - what is required for getting risk coverage from EKN?
“It is mainly letters of credit with short credit terms that are used as payment tools in transactions with Iran at the moment. So it is primarily letter of credit guarantees that EKN issued.
“For transactions to Iran, the Swedish exporter must first and foremost ensure that there is a bank that can perform the transaction.
“The transaction must also take place within the framework of the sanctions that still remain in place. This means, among other things, that the transaction cannot be performed in USD, since the USA has sanctions remaining that cover banks. EUR is the most common currency today.
“Each transaction must be controlled and approved against the background of remaining sanctions.”
Delegation to Iran
On 10 January EKN’s Director General, Anna-Karin Jatko, took part in the government’s delegation to Iran, together with Swedish companies and Business Sweden.