Saturday, January 21, 2006

Your Turn

What the future looks like.

The global chess game continues, with Iran making two bold moves to counter the Bushboy's drum beat of "we're going to attack you because of your nuclear ambitions".

The Times, London
Saturday, January 21, 2006,,251-2003034,00.html

Iran is transferring its assets from European accounts to other foreign banks to try to pre-empt possible United Nations sanctions over its nuclear programme, a senior Iranian official said. The official confirmed comments from Ebrahim Sheibani, the governor of the Central Bank, which were carried on the Iranian ISNA student news agency, that Iran had started transferring funds. There were no details as to where the funds might be heading. Mr Sheibani said: "We transfer foreign reserves to wherever we see as expedient."

The Asharq al-Awsat Arabic daily said that the Supreme National Security Council had ordered that $8 billion (£4.5 billion), about a quarter of its overseas assets, be moved to Singapore, Shanghai, Malaysia, and Hong Kong. Iranian overseas holdings are thought to top $30 billion, of which $4.1 billion was in Britain at the end of September, according to Bank of England data.

Iran Calls for Oil Output Cut
By Gareth Smyth and Najmeh Bozorgmehr
Financial Times, London

Friday, January 20

Iran has called for a cut in global oil production while simultaneously preparing to shift its foreign assets out of Europe. The moves were widely interpreted as a signal that Iran is preparing for a long stand-off with the west and sees oil production as a counter weight to international economic pressure.

Tehran's call on Friday for the Organisation of the Petroleum Exporting Countries to reduce production by 1m barrels a day helped take prices up to a four-month high of more than $68 a barrel, even though Iran is the only Opec member to call for the cut and is unlikely to find much support for the measure at Opec's meeting in Vienna on January 31.

Some traders said Iran's comment was a sign that Tehran might be willing to use the threat of halting its substantial oil production as a political tool in its nuclear spat with the west. Iran is the fourth biggest oil exporter and main supplier to Japan, South Korea, France and Italy.

The media in Iran this week has highlighted the upward pressure on oil prices simply through talk of sanctions. Just hours earlier, Ebrahim Sheibani, the Central Bank governor, said Iran would transfer the foreign exchange reserves "wherever we consider expedient" and confirmed a shift from Europe had begun.

Analysts say Iran is fearful that its deteriorating relationship with Europe could lead to a seizure of assets. Mr Sheibani refused to give details or to say where Iran's funds were going, although several local news agencies reported the destination was southeast Asia. The Central Bank manages Iran's "windfall" oil revenue in the Oil Stabilisation Fund, which Mr Sheibani said would contain about $15bn (?12.4bn) by the end of March. Iran keeps an unknown amount of this in Europe.

According to the International Monetary Fund, Iran's foreign exchange reserves are $30.6bn in hard currency. Tehran has another $9bn in foreign assets (but not necessarily liquid) abroad, it says.

A court in Rome last month ordered Banca Nazionale del Lavoro to freeze an account held by the Iranian government, pending a lawsuit over the deaths of three Americans in the Israeli-occupied Palestinian territories. Iran has protested that its official accounts were protected by the Vienna Convention governing diplomatic relations. But families of US citizens killed in the bombing of its Beirut embassy in 1983 by Hizbollah, the Lebanese Shia militant group, plan to follow suit -- asking European courts to seize Iranian assets after a US ruling that Iran should pay $126m in damages.

39 days until the Iranian Oil Bourse is set to open. Will Iran be able to move its funds? Cut oil production for a little leverage? Stay tuned.

1 comment:

Byrne said...

There is a large amount of info on the planned US strikes on Iran at also has some excellent analysis on the financial background to the current events.

Keep up the good work - I appreciate your efforts.