Treasury secretary says US financial system will stay closed to Iran
US refusal to allow “U-turn transactions” involving the US dollar undermines sanctions relief for Iran.
Treasury Secretary Jacob Lew said April 11 that the United States “will keep our part of the bargain” in providing sanctions relief to Iran in return for curbs on its nuclear program, but that the Barack Obama administration would not allow even limited access to the US financial system.
Lew’s comments, in response to a question from Al-Monitor at the Council on Foreign Relations, deepened uncertainty about how Iran will be able to conduct international trade and access hard currency reserves, primarily in Asian banks, that had been frozen under US sanctions until implementation of the Joint Comprehensive Plan of Action (JCPOA) in January.
Banking experts say that given the dominance of the dollar in international trade and finance as the world’s major reserve currency, Iran will have difficulty reaping the full benefits of the nuclear deal without some limited access to so-called U-turn transactions. The term refers to transactions that are priced in dollars — as most oil sales are, for example — that must be cleared through a US financial institution even though the money does not stay in the US bank.
The issue of U-turns has become politically controversial, and there are bills in the US Congress that would categorically outlaw them for Iran. Lew, asked about this by Al-Monitor, seemed to be trying to pre-empt such efforts. “We’re not proposing that the U-turn be changed,” he said.
