Monday April 20, 2009

I've Been Thinking:

An article in the Bahraini Gulf Daily News sent me running to the Iranian press to verify an amazing and apparently correct report.
Four US banks have applied to Iran for licenses to operate in Iran.
Citigroup and Goldman Sachs are the biggest of the banks to have applied.

The process is not easy.
If the banks do get permission, it will be limited permission.
The US banks will only be permitted to function in a free trade zone.
But if they adhere to Iranian law, they will be permitted to open branches in all the major Iranian cities.

I see two huge problems.
Problem # 1 is the 3 sets of sanctions that the United States was instrumental in passing against Iran. The US applies pressure to isolate and stop trade with Iran even if people are within the realm on non-sanctioned goods.

Problem # 2 is that Iranian banks must operate according to Islamic law.
That law forbids interest - it forbids earning interest or charging interest. The way the Islamic banks get around the law is that the Islamic banks pay "provincial rates." The provincial rate is the amount based on profits and losses in the bank.

More and more often, reality is more surreal than fiction.

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