Tuesday, June 17, 2008

Iran takes money upon risk of theft

Iran's $75B Disappearing Act

Lionel Laurent

If the Iranian press is to be believed, banks across Europe will be $75.0 billion worse off now that Iran has snatched back assets facing the threat of sanctions by other countries that are angered by its nuclear development program.

But there were few sources able to corroborate the story in Europe on Monday. Financial supervisory authorities in Britain, France and Germany refused to comment, citing rules of confidentiality regarding the firms they regulate. Major banks like Barclays (nyse: BCS - news - people ) and Societe Generale (other-otc: SCGLY - news - people ) also refused to say whether such activity had taken place.

One well-placed source close to Germany's national banking system, who did not wish to be named, even told Forbes.com that there had been "no indication" of any withdrawal of Iranian assets or activity as described in the Iranian press.

According to Iranian weekly Sharvand-e Ermouz, citing a top foreign ministry official in charge of economic affairs, Iran has withdrawn $75.0 billion in foreign assets that were in danger of being blocked under punitive sanctions. The official, Mohsen Talaie, reportedly specified that President Mahmoud Ahmadinejad had ordered the transfer, with part of the assets going into gold and equities, and the rest going to Asian banks.

The alleged withdrawal may have just come in the nick of time, with Prime Minister Gordon Brown of Britain backing President George Bush of the United States in his call for tougher sanctions on Monday. "We will take action today that will freeze the overseas assets of the biggest bank in Iran, the bank Melli," said Brown, at a joint press conference with Bush.

A spokesman for the British foreign ministry said that the next step would be to persuade the other members of the European Union to close ranks and also freeze Bank Melli's assets. Although this has not happened yet, fear of an imminent step-up in sanctions earlier this month reportedly spurred the Iranian government to action.

"The banking sanctions have proven quite effective in terms of slowing down and curtailing businesses," said Professor Ali Ansari, a specialist on Iran for foreign-policy institute Chatham House. "It doesn’t really help Iran." (See "Rice Touts Global Finance Squeeze On Iran")

That said, there is no sign yet that the sanctions will prove effective enough to stop Iran's nuclear program. The country has insisted it is only trying to develop nuclear power, not weapons.

Original article posted here.

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