US Extends Sanctions to Tidewater Middle East Co 23 June 2011
U.S. TREASURY DESIGNATION OF TIDEWATER MIDDLE EAST CO. AND IRAN AIR - 23 JUNE 2011
The US Treasury has designated Tidewater Middle East Co ("Tidewater") and Iran Air pursuant to powers vested under Executive Order 13382 (dated 1 July 2005), as part of continuing efforts by the US aimed at preventing Iran from developing nuclear weapons. Tidewater is the operator of seven ports in Iran, managing around 90% of Iran's container operations. The operations are believed to include:
- Bandar Abbas (Shahid Rajae Container Terminal)
- Bandar Imam Khomeini Grain Terminal
- Bandar Anzali
- Khorramshahr Port (one terminal)
- Assaluyeh Port
- Aprin Port
- Amir Abad Port Complex
According to the same press release Tidewater is owned by, inter alia, the Islamic Revolutionary Guards Corp (IRGC), and Tidewater facilities have been used by IRGC in facilitating the Government of Iran's weapons trade.
The designation of Tidewater means that Tidewater’s assets and other property within US jurisdiction (in the United States or within the possession or control of a US person) are blocked (frozen). This means that all funds transfers through the United States or the US financial system which are to, from, through, or that otherwise benefit or involve Tidewater will also be blocked. Additionally, US persons are prohibited from engaging in transactions and activities with or involving Tidewater.
In practice, all shipowners and operators will find it impossible to make payments to Tidewater, whether directly or indirectly, in US dollars. Non-US banks, and those dealing with alternative currencies, are increasingly wary of handling anything to do with Iran for fear of falling foul of US law. For instance, under the Iranian Financial Sanctions Regulations (s. 561.201(a)), which came into effect in August 2010, the US Treasury has authority to prohibit, or impose strict conditions on, foreign financial institutions access to the US financial system if they facilitate significant transactions or provide significant financial services for designated entities such as IRGC, or its agents or affiliates, such as Tidewater.
For non-US businesses, to whom the US sanctions do not directly apply, continuing to have dealings with a sanctioned entity such as Tidewater may nevertheless impact on their wider ability to trade with the U.S. For instance, several organisations in the US run a "name and shame" campaign to dissuade foreign / non-US companies from trading with Iran. Further, if the company has shares that trade on a US exchange, their trade with Iran (and other countries and targets subject to US sanctions) has to be declared in the company's public filings with the US Securities and Exchange Commission because of the perceived risk of such trade to investors. This is another US tool by which trade with Iran may be curtailed.
From a European perspective, Tidewater itself is not a designated entity under either the EU non-proliferation or human rights designations. However, IRGC is designated, and so too is Mehr Bank, one of the other companies that is believed to own Tidewater, along with IRGC. HM Treasury has indicated that, in the absence of clear evidence to the contrary, any payment to Tidewater by an entity subject to EU jurisdiction would be in breach of EU sanctions, on the basis that this would involve funds being made indirectly available to designated entities (ie IRGC and/or Mehr Bank).
By the same token, payments to Tidewater by individuals or entities in other countries which have implemented UN Resolution 1929 (2010) are likely to fall foul of the relevant domestic implementing legislation in those countries.