BEIRUT – U.S. economic sanctions on Iran could impede its access to coronavirus vaccines, business and financial analysts say, imperiling efforts to contain the largest outbreak in the Middle East and risking continued spread of the virus throughout the region.
While a spokesman for the Covax global vaccine program said Iran has received a U.S. government exemption to procure vaccines, analysts warn that financial sanctions hamstring Iran’s efforts to participate in the program and to make related medical purchases.
“The Trump administration has deliberately failed to provide the kind of clarity and guidance that would be necessary to allow financial institutions that contain Iranian accounts” to allow Iran “use of its own money for making these purchases,” said Esfandyar Batmanghelidj, founder and publisher of Bourse & Bazaar, a media company supporting business diplomacy between Europe and Iran.
Since the epidemic erupted in February, Iran has failed to gain a grip on the outbreak, which has infected more than 1 million people there and killed about 50,000, according to official reports.
Iranian Foreign Minister Mohammad Javad Zarif said last week that U.S. financial sanctions were preventing Iran from making an initial advanced payment to the Covid-19 Vaccines Global Access Facility, of Covax, which was designed by the World Health Organization to ensure a more equitable distribution of coronavirus vaccines. On Monday, Iranian media quoted Iran’s Central Bank head, Abdolnaser Hemmati, making a similar complaint that his government’s payment to Covax had been blocked.
Iran has “pre-purchased” 16.8 million vaccine doses through Covax, which would cover around 10 percent of its 80 million people, said Kianush Jahanpour, spokesperson for Iran’s Ministry of Health.
But Health Ministry spokeswoman Sima Sadat Lari told state television last month that Iran’s initial Covax payment to ensure participation had been held up. “Our country’s prepayment to participate in Covax is underway, but due to the cowardly sanctions of the Americans and the problems in the transfer of currency, this has not happened yet,” Lari said, according to Reuters’s translation.
A Covax spokesperson said Iran has secured a license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) to exempt the Covax payment. “There is no legal barrier to Iran procuring vaccines through the COVAX Facility,” they said in an email Friday. The spokesperson spoke on the condition of anonymity, citing the program’s policy.
But analysts said U.S. sanctions restricting Iran’s banking system – Washington’s most stringent yet – have added layers of red tape that complicate access to humanitarian and medical goods despite treasury exemptions.
Even with legal exemptions, a “culture of over compliance and a culture of fear” means that “foreign banks don’t know how to or don’t want to handle Iranian money, even for permissible trade,” Batmanghelidj said. Beyond these legal concerns, he said, financial firms and other businesses are hesitant to work with Iran “because it can take two or three times as long” to conduct a transaction because of bureaucratic hurdles.
Unless the restrictions are clarified and the fears quelled, analysts said, Iran could face dangerous delays and further hurdles in procuring vaccines.
“It’s very likely that complications, whether minor or major, will occur with regards to Iran’s financial contributions to the Covax program,” said Mohsen Zarkesh, an OFAC sanctions attorney at the Price Benowitz law firm in Washington. He added, “It’s going to take a lot of extra work and targeted work to make sure that international companies can provide those vaccines efficiently to Iran.”
While Iran has foreign currency reserves in such countries as Germany and South Korea, as well as its own central bank, moving or using this money involves layers of paperwork and delays, Zarkesh said.
Beyond the initial Covax payment, U.S. companies are probably also involved in various parts of the WHO’s and other vaccine programs, which “increases the sanctions risk” if Iran is included, he said.
The U.S. Treasury Department declined to comment.
Over 180 countries have signed up to join Covax, which aims to develop and distribute $2 billion in doses of a vaccine by the end of 2021. The idea is to provide rich and poor countries alike access to coveted vaccines when they become available by pooling capital to provide manufacturers with volume guarantees.
Iran is not the only country to miss its initial Covax payment, said Thomas J. Bollyky, director of the global health program at the Council on Foreign Relations. South African media reported Thursday that its government had not yet paid the first installment. The “lack of financing at this point would not keep [Iran] from participating,” Bollyky said.
Iran’s difficulties, however, are part of its larger challenge of accessing foreign reserves and making timely and predictable payments.
The United States has ramped up sanctions under President Trump’s “maximum pressure” policy and withdrawal from the nuclear deal, which President-elect Joe Biden has pledged to rejoin. The United States has targeted Iranian banks and individuals accused of funding terrorism, though transactions involving medical and humanitarian goods can qualify for a waiver. Nonetheless, analysts said that the exemptions themselves are not sufficient to ensure access.
“The truth is that sanctions do make it difficult to process transactions, even if there are humanitarian exceptions,” said Tara Sepehri Far, a researcher focused on Iran with New York-based Human Rights Watch.
Early on in the pandemic, Iran faced medical equipment shortages and struggled to procure more from abroad as domestic prices on available items soared.
Iran’s repressive leadership has come under fire for initially mismanaging and covering up the extent of the virus’s spread as hospitals, lacking medicines and beds, buckled under pressure.
In the meantime, Iran has moved to ramp up its own vaccine edge through state-affiliated companies and institutions. Iran has 12 vaccines under development and its own generic version of the antiviral drug remdesivir, according to Iranian Health Minister Saeed Namaki. The government gave approval Thursday for Iran’s first company to move forward with human vaccine trials and said doses could be rolled out this spring.
Iran and Russia are additionally in talks over a joint production of Russia’s coronavirus vaccine. In September, Iran said it would buy 20 million doses from an Indian manufacturer, whose late owner, Namaki noted, was of Iranian descent.
But Amir Afkhami, an associate professor and global health expert at George Washington University, said that mismanagement and budgetary restraints could help undercut Iran’s efforts to produce its own vaccines. “I have no doubt that the trickledown effect of U.S. sanctions have had a direct and indirect effect on the Iranian population,” Afkhami said. “But it’s not necessarily that U.S. sanctions are the only barrier in this issue.”