Today’s Mesop insight Turkey Banks & the Iran connection

25-4-2014 – Turkish outlet Today’s Zaman on Tuesday described a rush by Iranian banks to open and expand branches in Turkey in the aftermath of “growth restrictions” being lifted, a decision that the outlet explained was made by the country’s Banking Regulation and Supervision Agency (BDDK) “in light of the US and the UN Security Council loosening economic sanctions after headway was made in negotiations regarding the curbing of Iran’s nuclear program.”

Bank Mellat – which had been contracting due to sanctions-linked restrictions starting in 2012 – was cleared for expansion, a development that was followed by applications from two other Iranian banks that intend to open up in Turkey. The applications were approved. A report published in February by Jonathan Schanzer, vice president for research at the Foundation for Defense of Democracies (FDD), identified Turkey as a key global hub of illicit and terrorist financing, and the country has long been criticized for providing Iran both direct resources and financial channels with which to circumvent Western sanctions placed on the Islamic republic. Top officials from the Treasury Department rushed to Ankara in the aftermath of the implementation of the interim Joint Plan of Action (JPA) – which eroded sanctions against Iran – to warn the Turks that “Iran is not open for business” and that “[b]usinesses interested in engaging in Iran really should hold off.” Turkish outlet The Daily Sabah reported this week that, according to Iranian Ambassador to Turkey Alireza Bigdeli, Tehran and Ankara are now set to establish a free trade zone.