Eastern Neighbors Willing to Expand Banking Collaboration

Afghanistan and Pakistan have announced readiness to open bank branches in Iran’s free zones or the mainland, according to a Foreign Ministry official in Tehran.

Gholamreza Ansari, deputy foreign minister for economic affairs, expressed the hope that the move, in collaboration with the Central Bank of Iran and relevant authorities in the two neighboring countries, will help, ISNA reported.

He referred to US sanctions on Iran’s banking sector as one of the hurdles that have impeded normal economic relations with neighbors.

US President Donald Trump got out of the landmark 2015 Iran nuclear deal last year and resanctioned key sectors of the Iranian economy.

Despite the large volume of trade between Iran and its eastern neighbors, the sanctions have harmed normal businesses procedures in the region, causing many to turn to unconventional ways to conduct trade and transfer currency, including forex smuggling.

“US has allowed Afghanistan and a few other countries some exceptions to continue essential trade with Iran. However, there are no exceptions on banking when it comes to dealing with Iran. So, how are businesses supposed to pay their Iranian partners?” Khan Afzal Hadawal, former deputy governor at the Central Bank of Afghanistan told TRT World.

In a surprising revelation made last month, Khalil Sediq, governor of the Central Bank of Afghanistan, the war-torn nation’s top banking authority, admitted that hundreds of thousands of dollars are being smuggled into Iran on a regular basis.

Hadawal said the large amounts of cash that are crossing the porous borders are very likely the money that was owed to Iran.

Afghanistan is one of Iran’s major trading partners in the region with exports to that country close to $2 billion. Both sides have strived to create a system of alternative payment but so far without success.