But the reasons for Iran’s disaffection are very different. Euphoria greeted the lifting of punishing international sanctions in exchange for Tehran agreeing to externally monitored curbs on its nuclear programme. Iranians saw the chance to re-enter the world and reintegrate with its markets. Foreign investors scented an emerging markets bonanza of a scale last seen when the Soviet empire collapsed.
That optimism has largely evaporated, and the reason goes by the prosaic name of the Office of Foreign Assets Control, a branch of the US Treasury with extraordinary power and extraterritorial reach. International sanctions related to Iran’s nuclear programme have been lifted but #Ofac maintains in place robust “secondary sanctions” on individuals and entities the US accuses of “state-sponsored terrorism”, chief among them the Islamic Revolutionary Guard Corps (IRGC), the regime’s enforcer at home and strike force abroad. Ofac’s sanctions brought Iran to the negotiating table but the economic dislocation they caused enabled the IRGC to build a business empire. Any foreign investor, or bank financing deals with even tangential ties to the revolutionary guard, risks being shut out of the US banking system.
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As Adam Smith of Gibson Dunn, a leading US law firm, explains, Ofac’s power is greater than its formal regulatory role suggests, based on “ambiguity” that makes banks in particular do more than what the law strictly requires. “They have educated international banks to do this,” he says. “We don’t live in a purely legal world.”
Part of that education has been through punitive fines for breaking Iran sanctions, such as the nearly $9bn on BNP Paribas or around $1bn on Standard Chartered. The risk of being cut off from US credit markets is a formidable deterrent to any contact with Iran. “There is no institution so big that it can’t be de-banked,” says Mr Smith.
Some deals, such as Tehran’s plan to purchase more than 100 Airbus jetliners, are supposedly protected by the nuclear accord. Even that deal, requiring billions in credit, is on hold.
Ofac staff, Mr Smith points out, are the “same people who have spent their entire professional lives trying to eliminate access to Iran … and the banks steer clear of them. It’s a dissonance problem as much as a policy one.”
What makes the problem even more intractable is the number of actors, of which the US executive is just one (Ofac accounted for only about $1bn of the BNP Paribas penalty). Aggressive actors on Iran include the US Congress, different layers of the judiciary, state banking regulators, states that divest from companies with links to Iran — the list goes on. Iranian officials looking at Washington probably find their own famously convoluted structure of power straightforward by comparison. But if their leaders feel swindled by the historic nuclear deal, then its future is moot.
