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EghtesadOnline: As Qatar's rift with a Saudi-led Arab coalition deepens and brings the gas-rich emirate closer to Iran, the head of Iran Export Confederation said any development of ties between Tehran and Doha would hinge upon banking cooperation.

"Qatar's banking hurdles for Iranian banks still persist and if the country wishes to work with Iran in light of recent developments, it must restore banking ties with Tehran to their former status [before the sanctions] because the nuclear accord has been implemented and Iranian lenders are no longer under sanctions," Mohammad Lahouti told IBENA.

The regional crisis erupted after a coalition consisting of the UAE, Egypt and Bahrain led by Saudi Arabia cut diplomatic ties as well as all land, marine and air connections with Qatar as of last Monday.

According to Lahouti, the reality of the situation is that following the implementation of the Joint Comprehensive Plan of Action in January 2016, "Qatar has made no new openings in its banking ties with Iran" which is partially because countries in the Persian Gulf region are less than eager to restore their economic ties with Iran to pre-sanctions levels, Financial Tribune reported.

Referring to policies employed by a number of member states of the (Persian) Gulf Cooperation Council, the official said this lack of will stems from political matters and has hindered Iran-Qatar banking ties after the JCPOA and is the reason why Iran has almost zero correspondent banking ties with the Arab state.

Lahouti noted that at present only Bank Saderat Iran is active in Qatar, but Qatari banks do not engage in business and transactions with it.

As to why the banks are unwilling to establish ties with their Iranian counterparts, the head of Iran Export Confederation said there are many reasons, namely Iran's status with the Financial Action Task Force and "the regional policies of Persian Gulf countries".

Last June, the intergovernmental FATF, an internationally recognized entity mandated with devising regulations on fighting money laundering and combating financing of terrorism, suspended active countermeasures against Iran but made the country's removal from its blacklist contingent on its measures next year.

As its next heavily consequential sessions of June 18-21 for Iran draws closer, the FATF decision may make or break future prospects.

However, the official says the way international banks regard their Iranian counterparts from the perspective of costs and gains is the deciding factor in their ties, or lack thereof.

Insignificant Trade

Lahouti elaborated that Doha's trade interaction with Tehran is low, which pales in comparison to its extensive trade with the US and European countries. Therefore, instead of risking potential fines from the US government, which have in the past been slapped on a number of known international banks, namely BNP Parbias, ING and Commerzbank AG, "Qatar prefers to maintain its markets and not put its banks in jeopardy".

According to the official, Tehran-Doha trade amounts to $180 million at its best, about $30 million of which form the share of Qatari exports to Iran.

"As a result of this inconsiderable amount of trade, the administrations of both countries have not pursued establishment of banking ties and did not pay any attention to it," he added.

After the blockade, Iran has sent four shipments of food to Qatar using Iran Air Boeing 747s from airports in Tehran and Shiraz and has allowed the country's flights to go through Iranian airspace.

As Lahouti notes, normalization of banking ties and facilitation of visa issuance for Iranian traders by Qatar is a "necessity" for broader trade ties with Tehran.

If banking ties are established, he said, finance, opening lines of credit and employing them will prove helpful and "considering widespread construction activities in Qatar, the two countries can have good cooperation in technical and engineering services".

Asked whether any problems loom over insuring exports to Qatar, the official, who is also a member of the Iran Chamber of Commerce, Industries, Mines and Agriculture, said that as trade volume has been so low, not much attention has been paid to goods insurance.

However, Lahouti concluded, "the issue of insurance will be solved automatically when banking problems are removed".

Iran Banking Iran-Qatar ties Iran-Qatar trade Qatar crisis