May 30, 2014 3:36 pm

Iran hampered over release of frozen oil revenues, says official

An Iranian worker stands in front of a construction at the South Pars gas field development phases (5-8) in the southern Iranian port town of Asaluyeh©AFP

An Iranian worker at the South Pars gasfield in the southern Iranian port town of Asaluyeh

Iran has been unable to access most of the $4.2bn worth of frozen oil revenues meant to be released under the interim nuclear deal agreed with world powers, according to a senior adviser to President Hassan Rouhani.

But Akbar Torkan, a leading strategist in Mr Rouhani’s centrist government, said this should not undermine efforts to reach a comprehensive nuclear agreement by the deadline of July 20, which he said have been “so far so good”.

The landmark deal – agreed in Geneva in November – gave Iran modest sanctions relief worth about $7bn in return for substantial reductions in its nuclear activities and greater transparency.

The International Atomic Energy Agency said last month that the scaling down of Iran’s nuclear activities “are being implemented as planned”.

In a rare interview with international media, Mr Torkan told the Financial Times that sanctions had been eased from an “administrative point of view” in recent months in areas such as shipping, insurance, petrochemicals, cars and aerospace parts.

However, “complicated procedures” in financial transactions and continued US banking sanctions had hampered Iran’s ability to release $4.2bn worth of oil revenues that were a key part of the interim deal.

“Iran has so far been able to withdraw less than 50 per cent,” he said.

Some western officials have blamed Iran for not being efficient enough to overcome bureaucratic complications and make better use of the sanctions relief.

But Mr Torkan also played down the issue, underlining the importance of a nuclear deal to Mr Rouhani’s government. “I am not even surprised we face some difficulties. What matters is to reach a final solution [on the nuclear issue],” he said.

The six powers – the US, UK, France, Russia, China and Germany – negotiating with Iran are seeking a significant reduction in the number of centrifuges it operates, while Iran is pushing for a substantial increase in its ability to produce nuclear fuel.

On the discussions, Mr Torkan said: “The two sides agree on the main issues. Iran’s nuclear rights under the Non-Proliferation Treaty are respected, which is very important. Now, negotiations are over the size, aspects and details of Iran’s nuclear programme. Considering this . . . there is a lot of hope we can reach a final agreement in July.”

But the negotiations are a gamble for Mr Rouhani, who came to power last year on the promise of resolving the nuclear crisis and improving Iran’s ailing economy. Should he fail, analysts believe, Iran’s pragmatists could pay a huge political price.

Iran’s hardliners – who are being curbed for now by supreme leader and ultimate decision maker Ayatollah Ali Khamenei – claim the western powers intend to extend the nuclear inspections into non-nuclear military sites, in particular to its ballistic missiles which some claim can reach Israel.

However, Mr Torkan, who was minister of defence from 1989-93, said Iran would “never ever” negotiate over its military arrangements and nobody in the country would accept it.

Mr Rouhani hopes a comprehensive nuclear deal can lead to a gradual lifting of international sanctions and ease Iran’s economic hardship. Its inflation rate is running above 30 per cent and youth unemployment stands at almost a quarter, partly due to sanctions.

US and EU sanctions over the past two years have deprived Iran of at least $60bn worth of oil revenues, Mr Torkan acknowledged, although he declined to give a total figure for how much sanctions had cost Iran’s economy, which he said was “confidential”.

Despite hopes for a nuclear deal, Mr Torkan said Iran was also prepared for the economic consequences of failure.

“Iran’s economic plan – our plan A – is based on continuation of sanctions without using foreign investments,” he said. Under this scenario, economic growth would be about 2 per cent and inflation about 25 per cent by the end of the Iranian year in March 2015.

“But if a comprehensive deal is reached and sanctions are lifted, then we will think of plan B according to the new post-sanctions situation,” Mr Torkan said.

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COMMENTS (3)
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Linking this with the BNPP story, the US wants to restrict non-US companies getting a march on US companies in Iran. So BNPP gets shaken down but Boeing are allowed to line up contracts.

Extreme

You have a point on reliance on US controlled systems (anything denominated in dollars really). No dollar transactions and use of bullion must be part of prudent risk management in light of US attitudes. Iran is t like Cuba - more like Russia, the US will selectively choose to not enforce sanctions to allow trade (US sanctions on the USSR weren't formally repealed until the early noughties - the US just stopped enforcing them in the late 80s).

US will never lift all of the american sanctions. Just look at Cuba. US has screwed Cuba and just because political reasons the sanctions are not lifted.
Other countries need to learn that they should not depend and only use western financial systems/solutions like SWIFT. They are suppose to be non political institution but we all learned that they are not. And you never know against whom US will through the word terrorist against.

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