0748 GMT February 24, 2020
Money transfer between Iranian and European banks is still not possible despite the emphasis on the complete removal of Western sanctions on Tehran in the Joint Comprehensive Plan of Action signed between Iran and the six world powers.
This is while, as a result of numerous rounds of lengthy and highly sensitive nuclear talks between Iran and P5+1, the JCPOA has been in effect since a few months ago.
Following the implementation of the JCPOA, European banks and financial institutes were not willing to conduct monetary transactions with Tehran due to a host of reasons, including the fear of the being sanctioned by the US. Only a few small banks were involved in limited money transfer to and from Iran. To expedite the enactment of the JCPOA's contents, Iranian Foreign Minister Mohammad Javad Zarif met senior officials from a number of European states and convinced them to recommence financial relations with Tehran. As a result, since a few days ago, Iran has resumed euro transactions with some European countries.
Although the country has not yet managed to make any reimbursement or disbursement in the dollar, it is currently capable of remitting or receiving up to €15 million to or from European banks.
The breakthrough is indicative of an improvement in ties between Tehran and the European Union following the lifting of the embargoes.
Although the opening up of EU markets to Iran would partially pave the way for accelerated economic development, it would fail to guarantee speedy flow of foreign funds. Unless Iran overcomes its internal economic problems, such as the recession, it will not be able to put in a successful performance in drawing foreign investors, even if the ground is fully prepared for greater presence of European financers in the domestic market.
Although the Rouhani administration is currently seeking to stimulate the stagnant economy, Iran's recession is very deep and is impacting the domestic market.
The 11th government's praiseworthy achievement in bringing inflation down would fail to lead to a significant economic growth unless the executive body steps up efforts to end the recession.
Iran would boast a positive economic outlook if the domestic economy experiences growth, even with a relatively high inflation. Otherwise, even a low inflation rate would fail to pay off duly and guarantee growth.
Structural reforms in the domestic financial system would highly contribute to economic growth.