Oil, gas and Iran economic analyst
While sovereign wealth funds tied to oil revenues in Iran’s neighboring countries have surpassed $3.6 trillion, a new report by the Iranian Parliament Research Center reveals the extensive depletion and misuse of Iran’s National Development Fund (NDF).
According to data from the Parliament Research Center, between the establishment of the National Development Fund (NDF) in 2011 and March 2024, about 82% of its $161 billion in revenue has been spent. Notably, 88% of the loans disbursed by the fund went to the government and public institutions, including the Islamic Revolutionary Guard Corps (IRGC). In effect, a fund intended as a savings mechanism for oil revenues has instead served as a financial lifeline for inefficient state entities.
Of the $132 billion in loans disbursed over the past 13 years, only $8 billion has been repaid, while $18 billion is past due and classified as non-performing.
The report also reveals that as of March 2024, the fund’s foreign exchange reserves had fallen to just $26.5 billion. After accounting for $6.5 billion in outstanding obligations, only $20 billion remains in accessible assets.
The NDF has yet to release its financial report for the past fiscal year, which ended on March 20, but investigations by Iran International indicate that the government borrowed at least $10 billion from the fund last year. This borrowing occurred either directly through authorization from Supreme Leader Ali Khamenei, or by seizing a portion of the fund’s share from oil export revenues as permitted by the national budget law.
Under the current fiscal year’s budget, the government is also set to borrow at least $9.4 billion out of the fund’s projected $16 billion in oil revenue.
The fund was established 14 years ago to save a portion of Iran’s oil revenues and provide loans to the private sector, replacing the former Foreign Exchange Reserve Account. However, in practice, the government and military forces took control of most of its financial resources. Only $14 billion—less than 10% of the fund’s assets—was allocated to the private sector. Given the extent of corruption and cronyism, it is unlikely that these resources reached the true private sector.
If no further unexpected withdrawals are made by the government this year, the total state debt to the fund, or spent money, will reach $125 billion by the end of the year.
The critical issue is that the Iranian government lacks the financial resources to repay its debts, and the NDF is now attempting to offset part of the government’s liabilities by investing in oil fields and selling crude oil directly. This approach not only contradicts the fund’s original purpose, but it could effectively cut the government off from its own oil export revenues.
In the past few months, the government has projected daily oil exports of 1.5-1.8 million barrels, one-third of which is to be handed over directly to military institutions. If the NDFI also becomes a direct oil exporter, the government’s role in oil exports will be further marginalized.
Situation in Neighboring Countries
While the NDF’s manageable assets have fallen below $20 billion, data from the Global SWF Institute indicates that the total reserves of oil-related sovereign wealth funds in the Persian Gulf countries and Azerbaijan have surpassed $3.6 trillion. In addition to this, these states also possess a similar amount in other sovereign wealth funds.
For example, the United Arab Emirates manages eight sovereign wealth funds with total assets of $2.3 trillion. Among them, only the Abu Dhabi Investment Authority (ADIA) is oil-funded, with more than $1.1 trillion in assets.
Beyond the $6.7 trillion in sovereign wealth fund assets—whether linked to oil or not—public pension funds in these oil-rich neighboring states also hold around $650 billion in capital. In contrast, Iran’s public pension funds have been effectively bankrupt for years, surviving only through annual government budget allocations.
Moreover, the foreign currency reserves of the central banks in the Persian Gulf Arab countries exceed $850 billion, whereas, according to the Global SWF Institute, Iran’s Central Bank holds just $25 billion in reserves—most of which has been lent to the government and domestic banks in the form of loans and credits.
While the National Development Fund accounts for less than 0.5% of the region’s sovereign wealth fund assets, Iran possesses the second-largest oil reserves in the region after Saudi Arabia and ranks first in natural gas reserves.
Iran also has the third-highest oil production in the region after Saudi Arabia and Iraq, and it is the largest producer of natural gas in the Middle East.
Decades of flawed policymaking, rampant corruption, and the plundering of national wealth—combined with the impact of international sanctions—have steadily crippled Iran’s financial institutions.
Early on Sunday, dissident lawyer and civil activist Hassan Younesi posted on X that he had heard “some groups and organizations stationed at the embassy building … have been ordered to evacuate it.” The post quickly drew attention, partly because Younesi’s father, Ali Younesi, served as intelligence minister under reformist President Mohammad Khatami.
Hours later, however, Younesi deleted the post and published a follow-up, saying he had been contacted by what he called “responsible authorities” who denied the reports and said his post had created the mistaken impression that preliminary steps were being taken to prepare the embassy for a handover.
Such deletions by political activists and media figures—often under pressure from security agencies—are not uncommon in Iran.
Some users suggested that a potential handover could pave the way for American investments in Iran, especially after President Masoud Pezeshkian commented recently that Supreme Leader Ali Khamenei had “no objection” to American investors entering the Iranian market.
“Why would Trump push for direct talks unless it’s about reopening the embassy?” one user posted. “How else can US companies invest here?”
Former Israeli official and spokesperson Ben Sabeti also weighed in on X: “Iran makes cheap gestures toward @POTUS for the success of negotiations? There are reports about the US Embassy in Tehran being vacated for the first time since 1979. Is the regime also ready to make nuclear concessions?”
Meanwhile, Iranian media—highly constrained by censorship—picked up Younesi’s now-deleted post, but offered minimal commentary. “If true, this is a very meaningful step,” read a brief article titled What’s the story of the evacuation of the US Embassy building? published by Rouydad24 on Sunday. Fararu, another popular online outlet, published a gallery of recent photos showing foreign tourists visiting the former embassy, under the headline US Embassy in Tehran Draws Attention Again on Day of Talks—without offering any further remarks.
The US embassy takeover forty-six years ago
Islamist students occupied the embassy in November 1979. The students held tens of American diplomats and other staff hostage for 444 days. The embassy compound, which the students called “Den of Spies”, however, has been used as a base by IRGC-affiliated groups, including the Basij militia and its affiliated Daneshjoo (Student) News Agency.
Other parts of the building were converted into a museum and opened to the public in recent years. The Swiss embassy has represented US interests in Iran in the past forty-six years.
Calls for normalization of relations and re-opening of the embassy
In recent years, various Iranian political and media figures have supported the idea of restoring diplomatic ties with the United States and returning the embassy building after decades of occupation.
Most recently, reformist politician and cleric Mohsen Rohami suggested in an interview published by Khabar Online that Iran and the United States could re-open their embassies and that higher officials than foreign ministers could sit at the negotiation table.
“This will have a positive psychological impact, besides its practical outcome, on our society and neighbors,” Khabar Online on Sunday quoted Rohami, who served as the legal deputy of Pezeshkian’s campaign last year, as saying.
Back in August 2024, Mehdi Ghazanfari, head of the National Development Fund, called for the reestablishment of consular relations with the United States. He controversially blamed the Communist Tudeh Party for provoking the 1979 embassy seizure and urged the Pezeshkian administration to act fast before what he called his political rivals' honeymoon with him ended.
His suggestion was echoed by some other politicians and public figures including Mohammad-Hossein Khoshvaght, a former official of the Islamic Guidance Ministry and managing director of Fararu. Khoshvaght has close ties to Khamenei’s household through the marriage of his sister to Khamenei’s eldest son, Mostafa.
Khoshvaght contended that normalization of relations could benefit both countries. "An Iran that has normal relations with the United States is a nightmare for Russia and Israel; for Putin, an Iran with nuclear weapons is less dangerous than an Iran that has normal relations with the United States!" he wrote on X.
In a 2015 interview with The Guardian, Akbar Hashemi Rafsanjani said reopening the embassy was “not impossible” if both sides changed their behavior. Similarly, in a 2014 interview with Swiss TV during the Davos Forum, President Hassan Rouhani said animosity with the United States could eventually turn into friendship.