Conservative Body Rejects Bill Against Financing Terrorism As Sanctions Take Effect

Iran’s conservative-dominated Guardian Council, a body that oversees legislations made by the Iranian Parliament (Majles) has rejected a bill on joining the UN convention against financing terrorism (CFT), which was ratified by parliament in early October.

Joining the CFT is one of the requirements of the Financial Action Task Force (FATF) for taking Iran out of its black list.

The FATF announced on October 19 its decision to continue the suspension of counter-measures against Iran. However, it expressed disappointment that the majority of Tehran’s commitments to combat money-laundering and funding terrorism (known as AML/CFT) have not been fulfilled. Some observers say the CFT is “the most important one” of the four FATF requirements.

While suspending Iran from its blacklist temporarily for another four months, the FATF said it expects Iran to proceed swiftly in reforming its financial regulations and ensure all of the remaining items are addressed by completing and implementing the necessary AML/CFT reforms.

The Guardian Council’s decision casts doubt on Iran’s financial cooperation with the remaining Western partners of the nuclear deal after the US pull-out, while a new round of US sanctions against Iran will be reinstated by midnight on Sunday November 4, and three EU members, –UK, France and Germany – have offered to help Iran circumvent the sanctions on the condition that Tehran abides by the FATF requirements.

Iranian hardliners oppose Iran’s commitment to FATF requirements believe joining the CFT which calls for transparency in the government’s financial transactions, would prevent Iran from extending financial support for the Palestinian group HAMAS, the Houthi rebels in Yemen and the Lebanese Hezballah.

Guardian Council Spokesman Abbasali Kadkhodai tweeted on Sunday that according to the Guardian Council, parts of the bill ratified by the Majles was ambiguous and against the Shari’ah and the Constitutional law.

Meanwhile, prominent conservative commentator Mohammad Mohajeri wrote in a tweet on the same day, “Rejection of the CFT bill by Guardian Council on November 4 was the council’s gift for Trump.” He accused the Guardian Council of imposing sanctions on the people” of Iran.

The next step for the Majles would be to address the “flaws” the Guardian Council has pointed out and return the bill to the Guardian council for another review. If the Council rejects it once again, then the Expediency Council will have the final say.

While Iran’s Supreme Leader avoids passing judgment on the matter fearing accusations of conformism would tarnish his image as a non-conformist authoritarian ruler, various decision-making bodies of his regime, try to delegate responsibility for such a decision to others. This is one of the reasons that has put the fate of three of the four FATF bills in a state of lull for months.

Khamenei has said he has no objection to the Majles debating the case, but refrained to take any clear position.

In the meantime, Iran’s economy is paralyzed by widespread corruption and gross mismanagement coupled with the impact of US sanctions, fuelling protest demonstrations that swept across Iran in two major waves of social unrest in January and June.

According to Radio Farda’s economic analyst Arash Hasan Nia, “Economic actors do not believe officials’ promise that sanctions would not further deteriorate the state of the economy as rising foreign exchange rates indicate the growing concern about the impact of sanctions after November 5.”

As the Iranian economy is dependent on oil revenues, a dramatic decline in revenues and the resulting financial bottlenecks and the high risk of investment in Iran as well as limitations in the area of foreign trade would make crises more probable, Hasan Nia added.

The sanctions imposed on Iran before the 2015 nuclear deal brought Iran’s economic growth rate from about five percent to around minus seven percent.

After the nuclear deal, Iran managed to restore its oil production and export level to the amount it used to produce and export before the sanctions were imposed. Now, the second round of reinstated US sanctions aim to reduce Iran’s oil export to nil, although observers say Iran can always sell up to one million barrels per day thanks to wavers and other mechanisms such as barter trade. One scenario drafted by the Majles research center, maintains that Iran’s oil export would never plummet below 500 thousand barrels per day.

Radio Farda’s economic analyst, however, observes that now, “Iran has some experiences in the area of coping with sanctions. On the other hand, while pre-2015 sanctions were international measures backed by UN, this round of sanctions are imposed unilaterally by the United States.”

Hassan Nia also observed that “The United States too, is now better informed about how Iran circumvents or avoids sanctions. And there is a different resolve at the White House to impose the sanctions.”

“Although Iranian officials have defiantly said that the US has already imposed all the sanctions it could, and that there is nothing to worry about what happens after November 4, the landmark will still remain significant,” Hassan Nia maintained.

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