The United Nations Security Council imposed wide financial sanctions on Iran. In order to push Iran to stop enriching uranium, the UN and the US requested that international financial institutions stop issuing cargo insurance for Iranian ships suspected of carrying weapons parts.
In order to prevent trading problems with the US and extensive paperwork, some of the most important cargo insurance companies from the West have been denying cargo insurance coverage to Iran, thus crippling its ability to ship and receive vital cargo. The sanctions penalize foreign companies that sell fuel and oil products to Tehran, so shipping companies and ports worldwide have been slowly reducing trading with Iran. If companies deny cargo insurance coverage to ships carrying equipment, oil, and other supplies, Iranian ships won’t be able to sail. According to Mohammad Rounaghi, deputy manager of Sea Pars, “Basically, most ports will refuse them entry if they are not covered for possible damages.”
Furthermore, in order to comply with the U.S. sanctions, Lloyd’s and other important cargo insurers announced they won’t continue insuring gasoline imports to Iran. Fuel suppliers in Europe and the Middle East are also stopping supplying gasoline for Iranian airplanes. BP also voided an agreement to supply fuel to Iran Air in Germany.
Under the new rules, shipping companies are also responsible for inspecting their transport and have to prove to the United States government that they were effectively inspected the cargo to make sure there are no ban products. This will add a lot of work and paperwork to the transactions.
However, India and Russia declared they will continue negotiating with the Islamic republic.
Although the import of material has increased by 50 % in Iran, local business people worry about the future of trading with Iran. With the new shipping and tracking technology, it is more difficult to dodge the UN watch. The question is, how will goods and machinery get to Iran, and how will oil be shipped out if there are no ships?
Original Article By Thomas Erdbrink and Colum Lynch
Washington Post Foreign Service
July, 2010
Tags: cargo insurance, cargo insurance penalty, cargo insurance required for ships, iran shipments stopped
