Iran General News Iran, at risk of UN sanctions, says moving assets

Iran, at risk of UN sanctions, says moving assets

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Reuters: Embroiled in a nuclear standoff with the West, Iran said on Friday it was moving its foreign assets to shield them from possible U.N. sanctions and flexed its oil muscles with a proposal to cut OPEC output. By Parinoosh Arami

TEHRAN (Reuters) – Embroiled in a nuclear standoff with the West, Iran said on Friday it was moving its foreign assets to shield them from possible U.N. sanctions and flexed its oil muscles with a proposal to cut OPEC output.

“Yes, Iran has started withdrawing money from European banks and transferring it to other banks abroad,” said a senior Iranian official, who asked not to be named.

Central Bank Governor Ebrahim Sheibani was quoted earlier as saying Tehran had started shifting funds, but he sidestepped a question on whether the assets would go to accounts in Asia.

It is far from clear how placing assets in Asia or anywhere abroad would protect them from being frozen as few governments or major banks would be willing to flout U.N. sanctions openly.

The United States and the European Union want the International Atomic Energy Agency (IAEA) to refer Iran to the Security Council at an emergency meeting on February 2.

The council has the power to impose trade or diplomatic sanctions, though no swift action to punish Iran is likely.

Russia and China, which both have major commercial interests at stake in the Islamic Republic, have urged caution.

Iran’s ambassador to the IAEA in Vienna said hauling his country to the council would be difficult because of the views of Russia, China and some European and developing countries.

“Sending Iran to the Security Council lacks a legal basis,” Aliasghar Soltaniyeh told the semi-official Fars news agency.

Iran is trying to avoid U.N. censure or sanctions over its nuclear programme, which it says is entirely peaceful. The West suspects it of secretly seeking nuclear weapons.

Talk of shifting foreign assets indicated how seriously the Islamic Republic is taking the threat of U.N. sanctions.

“We transfer foreign reserves to wherever we see as expedient. On this issue, we have started transferring,” Sheibani told the ISNA students news agency.

Iran has bitter memories of its U.S. assets being frozen shortly after the 1979 Islamic revolution.

OIL JITTERS

Worries over Iran helped push oil above $67 on Friday and an Iranian proposal to slash a million barrels a day off OPEC production from April was not calculated to calm markets.

OPEC governor Hossein Kazempour Ardebili told the Mehr news agency the cut was needed because markets are oversupplied by some two million barrels per day, which he said could cause an oil price collapse in the second quarter of the year.

Most traders are more concerned about a shortage of spare capacity and an array of geopolitical risks than any glut.

China’s state-run press urged Iran to halt nuclear work and return to talks with Britain, France and Germany, but argued against taking Tehran to the Security Council.

“Negotiations remain the best option, as sanctions will muddy the waters,” the China Daily said in an editorial, saying Iran must return to negotiations with the European Union.

The EU trio scrapped the talks last week after Iran removed IAEA seals on uranium enrichment equipment and resumed a suspended nuclear research programme. U.S. and EU officials say there can be no more talks unless Tehran reverses these steps.

“The international consensus is unmistakable and important,” said the China Daily. “Iran should respond to the diplomatic efforts of the international community.”

Iran is the world’s fourth biggest oil exporter and the second largest in OPEC. Oil provides 80 percent of its export earnings, which have soared over the past two years.

Economists estimate Iran will have earned more than $40 billion in oil revenues by the end of the year to March 2006. Of this, $16 billion goes straight to budgeted government spending.

The rest goes to the Central Bank of Iran which keeps an unknown amount in foreign accounts. The Naftiran Intertrade Company (NICO), the powerful trade and financing arm of the National Iranian Oil Company, is based in Switzerland.

Shailesh Dash, head of strategic asset management at Kuwait’s Global Investment House, said Iran might seek friendly havens for its funds in the Gulf or Asia.

“It’s a similar pattern to that which we have seen for the Gulf countries after September 11. If you feel there is a risk of the U.S. imposing sanctions then it makes sense to move those assets to friendly countries, such as the Gulf or Asia.”

Swiss banks would welcome asset transfers by Iran, a leading financial industry representative said.

“If you’re talking in terms of a safe haven proposal, that’s where Switzerland is very strong, stronger than Singapore or other places. We are a country that is non-judgmental,” said Steve Bernard, director of the Geneva Financial Center.

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