Iran moves funds ahead of possible UN sanctions

EMBROILED in a nuclear standoff with the West, Iran said yesterday it was moving funds out of Europe to shield them from possible UN 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. Financial markets reacted nervously to the uncertainty about Iran’s foreign holdings, estimated at over €24.7 billion, helping send oil to a four-month high above $67 (€55).

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 UN sanctions openly.

The US and EU want the International Atomic Energy Agency (IAEA) to refer Iran to the Security Council at an emergency board meeting on February 2. The council has the power to impose trade or diplomatic sanctions, though no swift action is likely.

Yesterday, the head of Russia’s atomic energy agency said Iran is ready for detailed discussions on the proposal to conduct Iran’s uranium enrichment in Russia. The proposal, under which uranium would be enriched in Russia for use in Iranian reactors, is aimed at eliminating concerns that Iran could enrich its own uranium to higher levels for use in nuclear weapons.

The US and EU have backed the Russian proposal as a way out of the deadlock over Iran’s nuclear programme. International pressure on Iran has mounted sharply over the past two weeks since Iran removed UN seals on its uranium- enrichment facility in Natanz. Anxious to maintain neutrality, IAEA chief Mohamed ElBaradei has refused an EU request to speed up a report on Iran’s atomic activities in time for the February 2 meeting, diplomats said.

Officials close to the IAEA said Mr ElBaradei also felt Western pressure to refer Iran to the Security Council at the meeting was premature. Diplomats said he promised the Iranians they would have until the next regular IAEA board on March 6 to meet his demand for better access to nuclear sites.

A US official denounced Iran as a threat to peace and said it had breached international law.

“Iran has overstepped the bounds of international law in seeking to use its facility at Natanz for centrifuge research and enrichment,” under-secretary of State Nicholas Burns told a news conference in New Delhi.

India, a nuclear weapons power with warm ties with Washington as well as an old friendship with Iran, advocated restraint, echoing Chinese calls for more talks between Tehran and the EU trio of France, Germany and Britain.

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