Sun, Jan 22, 2006 - Page 1 News List

Iran not shifting its money to Asia

ASSET RELOCATION Tehran's central bank has begun pulling its foreign currency from European banks amid fears of sanctions, but won't say where the cash is going


Iran, which has said it is shifting its money out of European accounts as the threat of UN sanctions mounts, will not move its currency assets to Asia, a deputy central bank governor said yesterday.

Tehran has bitter memories of its US assets being frozen shortly after the 1979 Islamic revolution and many foreign and domestic media speculated that Iran was eyeing accounts in Malaysia, Shanghai, Singapore and Hong Kong.

"Iran at the moment has no plan to transfer its currency accounts to those countries," Mohammad Jafar Mojarrad told the official IRNA news agency, when asked about the reports on Tehran shifting its holdings east.

The Central Bank of Iran confirmed that his remarks were a correct representation of policy but declined to comment further.

Several economists have speculated Iran could prefer to move its assets to Gulf and other Islamic accounts.

Iran faces referral to the UN Security Council for possible sanctions after failing to allay the world's suspicions it is seeking atomic weapons.

Tehran says it needs atomic power for generating electricity.

Central Bank Governor Ebrahim Sheibani said on Wednesday that Iran would repatriate its assets held abroad if necessary.

He acknowledged that Iran had begun moving its foreign currency from European banks, the ISNA news agency reported on Friday. However, Sheibani did not disclose how much of the nation's assets were being moved, nor did he name the countries that would receive them.

"We transfer the foreign exchange to wherever we deem it fit," he told ISNA, after reporters asked him whether Iran was transferring money to countries in Southeast Asia.

"We have already begun transferring and we are currently doing that," he said.

It is unclear how much of Iran's copious oil wealth is kept in foreign accounts. The Naftiran Intertrade Co, the trade and financing arm of the state oil company, is based in Switzerland.

Economists estimate Iran will have earned more than US$40 billion in oil earnings by the end of the 12 months to March. Of this, US$16 billion goes straight to budgeted government spending.

The rest goes to the Central Bank of Iran which keeps an unknown amount of holdings in foreign accounts.

The standoff between Iran and the West stems from widespread concerns, particularly in Europe and the US, that Iran is intent on developing nuclear weapons. For its part, Iran insists that it is pursuing a nuclear program strictly for peaceful energy purposes.

Despite the overarching threat of sanctions, the American and Europeans said this week that they were not pressing for them against Tehran now.

Instead, the diplomats said they were pursuing a more limited effort to debate the issue at the UN Security Council, then send it back to the International Atomic Energy Agency, the UN's nuclear monitor, in the hope of getting Tehran to suspend its uranium enrichment activities.

The strategy comes as a response to Russian and Chinese resistance to pressing for sanctions at this stage, despite their concern that Iran has violated its pledge to suspend its enrichment of uranium.

The Russians and Chinese say Iran might retaliate by breaking off talks over its nuclear program and forcing international inspectors to leave the country.

Indeed, Russia's top nuclear power official, Sergei Kiriyenko, said on Friday that Iran was warming to an offer by Moscow to defuse the crisis by allowing it to enrich uranium on Russian territory. The proposal is intended as a guarantee that Iran will not refine weapons-grade uranium.

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