Tea Exports To Iran Stops Due To Impending Financial Sanctions
By Chrishanthi Christopher
The Tea Exporters in Sri Lanka are in a dilemma as to the future of the tea industry following the United States/European Union sanctions which is to take effect beginning next month.
Last week, tea exporters remained on the sideline refusing to sell their tea to Iran. Mainly low country tea exchanged hands at the auction with an overall price fall of Rs. 5 to Rs.15 a kilo.
The Tea Exporters’ Association Chairman Niraj de Mel says that the Iranian traders wanted to buy but the Sri Lankan exporters were not ready to sell their tea to Iran. “Concerns over the imminent trade embargo on Iran has pushed our exporters to the sideline,” de Mel says.
“Nobody wants to sell as they are worried about how they could get the payments,” says de Mel. Added to the confusion the only government bank that was dealing with Iran and facilitating payments has closed shop.
The bank is refusing to deal with any transactions that has to deal with Iran due to the embargo that is to come into force next month, says de Mel.
“From the time the United Nations threatened imposing sanctions against Iran over its nuclear programme, private banks refused to have any dealings with Iran.
The only government bank that was facilitating the letters of credit of the tea exporters is now refusing to accept any documents,” he added.
De Mel says that the government bank acted only as a ‘post box’ that it only accepted the L/Cs for shipment from exporters and forwarded it to the receiving bank in Iran.
On receiving payments the bank advises the exporter here.
“The bank now is only doing mopping up operations for L/Cs that were shipped out end of last week. With the money route blocked no one wants to sell their stock,” de Mel says.
Last December the United States signed documents that would curtail Iran’s access to international banking systems scheduled to take effect on June 28.
Recently following representations made by the tea plantation industry the government sent a delegation consisting treasury personnel and other officers to Iran to negotiate the payment for purchases of tea within a minimum of three weeks.
“But nothing came out of it,” says de Mel.
Iran which buys over 90 per cent of our tea is well stocked for around six months.
“They are heavy tea drinkers and they bought rapaciously last few months and are well stocked even till the Ramada festival is over. Sanctions are sanctions and no new orders will be entertained,” de Mel contends.