Bahrain Mirror - Reuters: Britain's vote to leave the European Union and the rise of U.S. presidential nominee Donald Trump have paralysed efforts by Western governments to encourage already highly reluctant international banks to do business with Iran.

Uncertainty is frustrating Tehran's push for foreign investment to revive its struggling economy: over Britain's political and economic future, over whether Trump - who wants to scrap a nuclear deal with Iran - will get into the White House, and over whether banks will fall foul of U.S. sanctions if they process transactions with the Islamic Republic.

Iran's failure to get full access to the global financial system a year after it signed the nuclear deal with world powers has intensified domestic political infighting. It has also turned up the heat on President Hassan Rouhani, a pragmatist facing re-election next year, who has gambled on attracting foreign investment to help raise voters' living standards.

Under the deal, international financial sanctions on Iran were officially lifted in January this year and yet it has secured banking ties with only a limited number of smaller foreign institutions.

One senior Iranian official said Tehran was examining alternatives. "Iran will continue to work with small banks, institutions as long as major European banks are reluctant to return to Iran," said the official.

"Our estimation is that this uncertainty will continue for a few years. We are in talks with many countries, mainly China, Russia and African countries to widen our banking cooperation aimed at resolving existing banking, financial problems."

U.S. banks are still forbidden to do business with Iran under domestic sanctions that remain in force. European lenders also face major problems, notably rules prohibiting transactions with Iran in dollars - the world's main business currency - from being processed through the U.S. financial system.

Banks remain nervous following a string of heavy U.S. penalties, including a $9 billion fine on France's BNP Paribas in 2014, largely for violating U.S. financial sanctions.

WATCH AND SEE

Britain says it remains committed to tackling the banks' concerns, while the U.S. Treasury says it won't stand in the way of legitimate business with the country.

However, Iranian officials and foreign bankers believe the British political upheaval after last month's referendum has distracted governments in London and other European capitals, while the possibility that the shock will send the British economy into recession has deepened banks' caution yet further.

"Fear over Brexit's financial consequences have made Britain and other European countries more careful over their interaction with Iran. Most of them have adopted the policy of watch and see," another senior Iranian official told Reuters.

"The British banks and authorities have a very big problem to deal with and since the vote, they have been less eager about Iran and I can even say almost not interested. Of course, we believe we can still work with British banks and have told them so."