News
Tea-oil deal with Iran to overcome sanctions issues
The Sri Lanka Tea Board has proposed that the payments due from Iran for tea purchases from Sri Lanka be offset against the US$ 250 million that the Ceylon Petroleum Corporation (CPC) owes to Tehran for oil. The proposal was made to the Central Bank in the wake of fresh regulations Sri Lanka’s Foreign Ministry has issued in compliance with United Nations Security Council Resolution 1737 of 2006 and 2231 of 2015.
Resolution 1737 establishes a Security Council Sanctions Committee (1737 Committee); imposes sanctions on Iran for failing to stop its uranium enrichment programme following resolution 1696 (2006); imposes a ban the supply of nuclear-related technology and materials and imposes assets freeze on key individuals and companies related to the enrichment programme.
Resolution 2231 (2015) provides for the termination of the provisions of previous Security Council resolutions on the Iranian nuclear issue and establishes specific restrictions that apply to all States without exception. This resolution was adopted after the nuclear agreement between Iran and six world powers — the United States, Russia, China, Britain, France and Germany. In May this year, President Donald Trump announced the US withdrawal from the deal and outlined fresh US sanctions on Iran.
Tea Board Chairman Lucille Wijewardena said the board had made the proposal as under the UN sanctions, there were restrictions on financial transactions with Iran. “If the CPC pays us, we can continue the export of tea to Iran as there is no ban on this commodity. The amount the CPC owes Iran can offset payment for a year of tea export to Iran,” he said.
He said Tea Board officials met CB Governor Indrajit Coomaraswamy this week and more talks would be held in the coming week to reach an agreement on how to overcome the sanctions problem and continue tea exports to Iran. He said they hoped to reach an agreement soon.
The United Nations (Sanctions in relation to Iran) regulations issued this week by Foreign Affairs Minister Tilak Marapana prohibits certain financial dealings with Iran and provides for the appointment of a Competent Authority to ensure compliance with the sanctions.
The regulations are to enable Sri Lanka to implement targeted financial sanctions relating to the proliferation of weapons of mass destruction giving effect to several UN resolutions. The Competent Authority and the Central Bank’s Financial Intelligence Unit will be providing guidelines and directions to institutions on their obligations and duties under these regulations.
Iran is Sri Lanka’s fourth largest tea buyer. In 2016, Sri Lanka exported 33,929 metric tonnes of tea to Iran but this fell to 27,419 in 2017.