New sanctions crimp Iran's shipping business as insurers withhold coverage

Angry governments

The U.S. sanctions have angered many governments, including Russia, China and India, which claim the United States has no right to unilaterally impose U.S. laws on their companies. On Wednesday, Sergei Shmatko, the Russian energy minister, met with the Iranian oil minister, Masoud Mir-Kazemi, and said afterward that Moscow has no intention of abiding by the U.S. sanctions.

"The sanctions cannot stop us," he said. "If there is a commercial interest and attractive terms, Russian companies are ready to supply oil products to Iran." India has also said it would ignore the U.S. sanctions.

Even so, foreign-flagged ships could encounter problems sailing to Iranian ports, experts said. Maritime transportation companies often charter ships and rent out portions of the cargo space. Freighting companies regularly outsource loading to subcontractors.

"Under the new sanctions, all of these groups are responsible for the cargo the ship is carrying," the Dutch insurer said, explaining that the companies must prove to the U.S. government that they exercised "due diligence" in checking that the cargo holds no forbidden products. "For most companies, that will just be way too much paperwork."

Iranian private transporters are worried for the future. Under Iranian President Mahmoud Ahmadinejad, the import of goods, including Chinese textiles and German luxury cars, has increased by 50 percent. "How will we get those products to Iran if there are no ships?" a Tehran-based owner of a family-run international transportation company said. "In today's globalized world, it is much harder to evade sanctions."

There are more ominous signs on the horizon for Iranian transporters. The European Union is expected to approve its own sanctions against Iran in the coming days.

A consortium of Iranian government-owned insurance companies last week sought to allay insurers' concerns, pledging to put up $1 billion as a guarantee. But the offer has received a cool response, according to the Dutch insurer.

"Imagine your oil tanker crashing into a cruise ship filled with Americans in the port of Hong Kong," the insurer explained. "A billion dollars doesn't cover that."

Lynch reported from New York. Special correspondent Kay Armin Serjoie contributed to this report.