Omanis offer funding lifeline to Iranian traders
Tuesday, 21 February 2012 | 11:00
Iranian traders in Oman, struggling to secure financing because of Western economic sanctions against Tehran, are raising loans from sympathetic Omani businessmen in order to ship foodstuffs to Iran, the traders say.
"Local banks don't give us letters of credit anymore to export food to Iran, but we are grateful for the private loans from our Omani friends," Hassan Ghafour, an Iranian businessman based in the north Oman city of Sohar, told Reuters.
Meer Sajjad, an Iranian trader in the capital Muscat, said he was also being forced to turn to fellow businessmen because he could not obtain financing from banks.
"Without bank credit, it is very difficult to send anything to Iran. We don't have the cash to do it, nor do our Iranian counterparts. The sanctions make it difficult for them to send money in
The difficulties of Iranian businessmen in Oman underline how the sanctions, imposed over Tehran's controversial nuclear programme, are disrupting much of Iran's foreign trade, even in countries which have maintained good relations with Iran.
Oman, 50 km (30 miles) across the Strait of Hormuz from Iran, has close diplomatic ties with its huge neighbour. Last year it helped to arrange the release of two U.S. citizens convicted in Iran of spying. While Oman says it obeys United Nations sanctions against Iran, it has not adopted much stricter US-proposed measures such as a ban on bank financing of trade.
An Omani central bank official told Reuters that there was no official instruction from the government to prevent local banks from issuing letters of credit (LCs) to Iranian traders. The vast bulk of trade between the two countries remains legal.
But officials of two Omani commercial banks, who did not want to be identified because of the political sensitivity of the issue, said some banks had halted trade financing because they were concerned about the ability of Iranian importers to pay under sanctions.
"We are not extending the LCs because we are not sure if the Iranians will be able to pay us back under the present circumstances," said an official of one bank.
Ghafour said he and other Iranian traders in Oman were mostly shipping rice to Iran, as well as other foodstuffs such as cooking oil, sugar and flour.
According to the Indian embassy in Muscat, about 400,000 tonnes of basmati rice are exported each year from India to Oman. Roughly 70,000-90,000 tonnes of that amount is consumed within Oman and about 300,000 tonnes re-exported to Iran by Iranian traders, according to Oman's Ministry of Commerce.
Despite their proximity, total trade between the two countries is not large because the main export of both of them is oil and gas. Oman's exports to Iran totalled $521 million in 2009, only about two percent of its total exports, according to United Nations data.