WSJ: U.S. Further Tightens Iran Financial Controls

Commerzbank, Germany’s second largest bank, has bowed to pressure from the U.S. government and agreed to stop clearing dollar transactions for Iran from the 31st of January, The Wall Street Journal reported.

The move comes as part of a larger attempt by the U.S. government to hamper Iran’s economy by strictly limiting the transactions its state bank and firms can carry out.

Commerzbank is the last European bank known to be handling any dollar transactions for Iran and its withdrawal will be a significant boost to the U.S. aim to ground Iran’s financial operations and isolate the country, the Journal said.

Iran’s companies are expected to come under increasing pressure following the tightening controls as they have to use euros instead of dollars for all international transactions, which increases the costs incurred.

Iran’s main export is oil, which as an industry uses almost exclusively dollars for transactions, so the resulting costly currency conversions could have a significant effect.

Trade growth between Iran and the European Union, which reached $25 billion last year, is stagnating mainly due to the U.S. restrictions. Europe is by far Iran’s biggest trading partner.