Turkish banks hesitant about Iran dealings: Babacan

WASHINGTON - Turkish banks have become somewhat hesitant about dealing with Iran but Turkey has left decisions on whether to pull back following US and European sanctions up to them, a Turkish official said on Wednesday.

By (Reuters)

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Published: Thu 21 Oct 2010, 10:05 AM

Last updated: Mon 6 Apr 2015, 8:25 AM

Deputy Prime Minister Ali Babacan said he doubts sanctions will bring Iran to change its stance on its uranium enrichment program, which Tehran says is to generate electricity but Washington suspects is a cover to develop atomic weapons.

While saying Turkey would comply with UN Security Council resolutions, Babacan said his government had not provided guidelines to its banking sector on how to grapple with fresh financial sanctions imposed by the United States and the European Union.

“We don’t believe in sanctions. We don’t believe that that will ultimately make the Iranians act as they are expected to act. So why would we do things which we don’t believe? That’s the bottom line,” Babacan told reporters.

“As a country which has lived with (the) Iranians ... side by side for centuries, it is very difficult to expect them to move just because they are under pressure,” he added. “The more pressure, the more it may be difficult for them to move.”

Turkish banks have shown some wariness about dealing with Iran following U.S. and EU financial sanctions announced this summer, Babacan said, though he added that it was too early to say whether they were actually pulling back.

“We are observing a hesitation,” he said. “Some of them (are) finding ways to do business, some of them may be pausing and trying to decide what to do, but there is obviously some hesitation.”

A US law enacted this summer imposes sanctions on international banking institutions involved with Iran’s Islamic Revolutionary Guard Corps, its nuclear program or what Washington calls its support for terrorist activity.

The law, the Comprehensive Iran Sanctions Accountability and Divestment Act, effectively deprives foreign banks of access to the U.S. financial system if they do business with targeted Iranian banks or the Revolutionary Guards.

Stuart Levey, US undersecretary of the Treasury for terrorism and financial intelligence, visited Turkey on Wednesday to discuss US and UN sanctions with the private sector. He was due to meet Turkish officials on Thursday.

It was unclear how much of a hearing he would get from the Turkish government, particularly on the question of whether it should encourage Turkish banks to heed the US sanctions.

“We don’t have any specific guidelines for Turkish companies,” Babacan said. “What we are telling them is that these are the laws, look at them, but there is not any reason for paranoia ... it is their own decision.”

Turkey, a NATO member that looks to join the EU, has enjoyed growing economic and financial relations with neighboring Iran, one of its major energy suppliers.

Trade between the two nations reached $10 billion in 2008 and could triple in five years, Turkish Prime Minister Tayyip Erdogan told a group of businessmen he met together with Iran’s First Vice President Mohammad Reza Rahimi last month.

Much of that trade is legitimate, but if Turkey became a virtual safe haven for Iranian banking activities, it will be easier for Tehran to dodge sanctions, according to diplomats.

Babacan said Turkey still hopes to triple its trade with Iran in five years, but acknowledged “the sanctions will make our job more difficult.”

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