Iran's Currency Falls With Fading Hopes Of A Nuclear Deal

The IRNA report did not mention who the high-level official is but said the visit would be the last step to execute “the recent agreement” to free $7 billion of Iran’s funds frozen abroad because of United States’ sanctions.

But in an unusual and obvious contradiction, foreign ministry spokesman, Saeed Khatibzadeh in his Monday morning briefing with reporters said his ministry had no knowledge of such a visit. Later, he told the media that an agreement to free some frozen funds does exist.

In the past months, there has been talk of unblocking $7 billion frozen by two South Korean banks after the US imposed banking sanction on Iran in 2018. A Korean diplomat visited Vienna in early January where talks to restore the Iran nuclear agreement were taking place, and met with all delegations.

However, IRNA said that “a framework” has already been agreed to free “a considerable part” of Iran’s blocked funds within a certain time period. It was not clear if the gradual release it mentioned would be about the $7 billion, or more money will be released by other countries, such as Iraq and Japan.

IRNA and other Iranian media reported last week that an agreement was reached, presumably with the US, to free the blocked funds, in what appears to be a deal to free dual nationals kept as hostages in Iran.

Washington has not commented on the Iranian reports, but last month the United Kingdom b paid more than $500 million of an old debt to Iran to free two dual nationals who returned to Britain.

In a proclamation sent to the heads of Iran’s three branches of power and the Expediency Council on Sunday, Khamenei on Sunday issued the policies aimed at improving social welfare, removing poverty, and supporting the vulnerable strata of the society in compliance with the first clause of Article 110 of the Iranian Constitution.

He ordered the presidential administration to cooperate with the parliament and the judiciary and mobilize all the relevant entities to provide a comprehensive plan for the implementation of these policies, including legislation, devising regulations and necessary executive measures, within six months.

Khamenei’s directive is a brief and general guideline issuing a series of orders that is meant to expand services to underprivileged people living in urban and rural areas.

In his decree, Khamenei called for establishing a comprehensive, integrated, transparent, efficient and multi-layered social security system, as more reports emerge of deepening poverty amid a 40-percent inflation rate.

The policies include reforming subsidy schemes, promoting job creation, providing all members of the community with access to social services and public resources, and paradoxically offering fertility services to increase the population growth rate.

The directive makes no mention of needed financial resources to expand the social security net. The Islamic Republic has for years provided general energy and food subsidies, but its centrally controlled and closed economy has stifled growth and made it vulnerable to oil export sanctions.

Four state-owned banks including Bank-e Melli, Iran's largest bank, published the list of their major debtors on Saturday, six months after the ministry of economy ordered them to publish quarterly lists of major debtors.

The ministry of economy defines a 'major debtor' as persons or entities that hold loans worth at least 10% of the bank's total resources but have not paid instalments for loans estimated to total around $10 billion in today’s exchange rate, but much more in US dollars when the loans were received.

"At first glance this can be interpreted as an important and positive step in battling corruption and recovering the money owed to state banks," Eghtesad Online (Economy Online) wrote Sunday, but it added that the lists are extremely vague and do not offer any details.

The lists show no information other than names of individuals and companies. It is very hard to trace the background of these individuals or the ownership of the companies, that appear to be subsidiaries or front companies set up by unknown firms, some connected with state enterprises with well-connected managers.

"None of the lists include information on the time the loans were granted to persons and entities that have a long record of getting loans and not paying back. It's also not clear if the banks decided on their own to grant the loans or were ordered [by other entities]. The information also does not reveal what the collateral for the loans were," Eghtesad Online wrote.

The publication also said it is equally important to know who endorsed the loans and bring them to account. It also said the purpose of publishing the lists is meant to enable the government to convince people that President Ebrahim Raisi is delivering on his election promises of fighting corruption and establishing transparency.

Officials say the move is proof that Raisi is delivering on his election promise of fighting corruption in the banking system. "One more of the President's promises was implemented. Melli Bank, the largest bank in the country, published the names of its major creditors," Government Spokesman Ali Bahadori-Jahromi said in a tweet Saturday.

Others such as Malek Shariati, a Tehran lawmaker in the parliament, say the publication of names of major creditors is proof that the administration and parliament are steadfast in establishing transparency and battling corruption.

Based on the budget bill, the government was mandated with publishing all information on major creditors on the central bank’s.

In 2017, outspoken reformist lawmaker Mahmoud Sadeghi published a list of major debtors of Sarmayeh Bank who has defaulted. In some cases, he said, the collaterals for the loans had been evaluated at a much higher price than their real worth.

Sadeghi called the phenomenon widespread in Iran 'crony capitalism', meaning those who have connections with centers of power could easily get loans that others find extremely difficult to secure. Many of the debtors had received low-interest, subsidized loans from banks.

Major debtors to banks with bad credit have allegedly used the money to speculate in the housing, foreign currency and gold markets rather than invest in production and have thus contributed to higher inflation.

Hossein Amir-Abdollahian, who was speaking at a meeting of officials dealing with foreign economic relations in Tehran, referred to Washington’s requests for direct talks with Iran and said that the United States should show goodwill. He emphasized that Tehran had asked the USto release some of Iran’s frozen funds prior to a final nuclear agreement but had received no positive reaction.

Amor-Abdollahian first made a direct demand in September 2021, while visiting New York, for the US to greenlight the release of $10 billion from Iran’s frozen funds.

Amir-Abdollahian once again on Sunday reiterated that Iran stands and will continue to stand on its “red lines” in the Vienna nuclear talks.

“The Americans continuously speak of the need for direct talks with Iran. After examining the issue and considering the views the Americans have, we did not find a benefit in direct talks,” he said. Amir-Abdollahian added, that the US “has not done anything positive” to provide confidence.

The chief Iranian diplomat’s remarks did not seem to be suggesting a new formal pre-condition for an agreement in Vienna, but it did appear that he wanted to emphasize the need for some sort of “goodwill” by the Biden Administration.

The negotiations stalled in mid-March after 11 months of talks among the original signatories of the 2015 nuclear agreement known as JCPOA, apparently because of Iran’s demanded from the US to remove its Revolutionary Guard from the list of foreign terrorist organizations.

At one point in his remarks, Amir-Abdollahian said that talks came to a halt after Russia’s invasion of Ukraine and the Western side told Iran that even if all outstanding issues were resolved, Russia would not agree to finalize a deal. In fact, Russia did make a new demandright before the talks ended in Vienna asking the US for waivers from Ukraine sanctions in its dealings with Iran.

Amir-Abdollahian maintained that instead of showing any goodwill, the United States imposed new sanctions on certain Iranian individuals and companies. He suggested that President Biden could release frozen funds with just one “executive order.”

He repeated that Tehran told Washington, “Not to create hurdles” and delay an agreement. “If our red lines are observed,” we can reach a good and lasting agreement, and now “it is the American side that must demonstrate goodwill,” Amir-Abdollahian said.

He added that the diplomatic path is open and claimed that the three European participants in the talks, the United Kingdom, France and Germany are also unhappy about unreasonable American demands.

The foreign minister emphasized that the people of Iran should know the government is striving for an agreement and lifting of sanctions, but he also repeated government’s policy of self-reliance in overcoming the impact of sanctions.

Iran’s economy continues to struggle amid a 40-percent annual inflation rate and a host of other serious issues mainly caused by US sanctions imposed by former president Donald Trump after he withdrew from the JCPOA in 2018. Criticisms and a general mood of despair has intensified in recent weeks as food prices continue to climb, and the government has no immediate solution to offer.

One report suggested that the United States has refrained so far from sending a counterproposal to Iran regarding its demand that the Revolutionary Guard be removed from the US Foreign Terrorist Organization list as a pre-condition to reviving the 2015 nuclear deal, the JCPOA.

Talks in Vienna that have lasted one year were close to completion at the end of February as the Russian invasion of Ukraine began. But then Iran that was insisting all along for the removal of all US sanctions imposed since 2018, demanded the delisting of the IRGC. The US position in the talks is that it will remove major sanctions related to Iran’s nuclear program, but not other sanctions that are related to terrorism or human rights violations.

Once the issue became public, opposition in the United States grew. Most Republicans and many Democrats openly put pressure on the White House not to delist the Guards, that are known to have caused mayhem in the Middle East by supporting a large network of militant groups, all the way to the Mediterranean shores and beyond.

The opposition made it less likely for the Biden team to agree to Iran’s demand, specially as Democrats face an uphill battle in the November elections.

But a nuance in White House statements leads to the possibility that President Biden might be thinking to delist the IRGC but not its extraterritorial Qods (Quds) Force, which is Iran’s direct arm for building up anti-US, anti-Israeli, and anti-Saudi forces in the region.

An opinion piece by David Ignatius in the Washington Post on Friday mentioned that sanctioning the IRGC in 2019 was somewhat of a controversial issue, as some in the government and outside experts believed the multi-faceted entity was not only Iran’s main military force but also a major player in Iran’s economy and the public sector in general.

But opponents of giving a reprieve to the IRGC argue that separating it from the Qods force would be a wholly artificial distinction, just as trying to distinguish between the political and military wings of Hamas or Hezbollah. The US has traditionally rejected such a distinction.

Frequent Iranian threats directed at the United States and Israel are officially pronounced by the Revolutionary Guard, not just by the Qods Force, which speaks occasionally. Practically, the IRGC might even officially disband the Qods and create another outfit overnight that would carry out the same mission in the region.

The issue is Iran’s anti-West ideology kept alive by Supreme Leader Ali Khamenei who reinforces it in every public speech. Every Iranian government entity is supposed to fight against the archenemy, America, and Israel, according to the official dictum of the Islamic Republic.

Even at the height of improved ties in the wake of the JCPOA, Khamenei declared in 2016 that the Islamic Republic had no intention of cooperating on regional disagreements with main enemy the United States and “evil” Britain. He repeated the same message in November 2017, before former president Donald Trump had pulled out of the JCPOA and imposed sanctions.

The Biden administration, however, believes that the revival of the JCPOA is important to delay Iran’s nuclear breakout timeline, while opponents believe in continuing ‘maximum pressure’ sanctions until the regime is crippled or collapses.