US says Iran can’t access much oil money

By Marjorie Olster, AP

WASHINGTON–The U.S. government has concluded that nearly half of Iran’s monthly earnings from crude oil exports are accumulating in accounts outside the country because of sanctions that restrict Tehran’s access to the money.

The estimates, provided to The Associated Press by a senior U.S. official and never released before, are the latest indication that new sanctions imposed in February are deepening Iran’s economic distress and making it increasingly difficult to access billions of dollars in vital oil revenues. The official spoke on condition of anonymity because of the sensitivity of sanctions policy.

The U.S. hopes the pressure will force Iran to compromise on its nuclear program, which the West suspects is aimed at making a weapon. Iran insists it is for peaceful purposes only and has not budged on demands to halt uranium enrichment — a process that can be used to make fuel for energy or for a nuclear weapon.

The U.S. government estimates about US$1.5 billion of crude oil revenues is piling up in restricted foreign accounts every month now. Crude revenues overall averaged about US$3.4 billion monthly in the first half of year, according to the assessment.

This means Iran is not able to either spend or repatriate about 44 percent of its crude oil income.

The February sanctions, which dealt one of the harshest blows to the Iranian economy in recent times, aimed at cutting off access to oil revenues. They require an already reduced pool of oil importers to pay into locked bank accounts that Iran can access only to purchase non-sanctioned goods in that country or humanitarian supplies.

If importers do not comply, they face the threat of being shut out of the U.S. financial system. The U.S. has granted sanctions exemptions to China, India and seven other countries to import Iranian oil. Only six are currently importing oil, according to the government.

The U.S. reached the estimates by looking at Iran’s trade imbalances with oil importers based on customs data from each of the relevant countries. The figures show Iran cannot spend the full amount it earns because it is limited to buying only non-sanctioned goods for imports from the small pool of trading partners. And it is not able to repatriate the money to fill its foreign reserve coffers or cover any budget shortfalls.

Garbis Iradian of the Institute of International Finance (IIF), an economic think tank, noted that despite wave after wave of sanctions, Iran continues to run a trade surplus. But that surplus has been steadily shrinking since 2011. The assets piling up abroad could render most of that remaining surplus essentially unusable.

Iradian, the deputy director of IIF’s Africa and Middle East Department, said Iran’s total trade surplus has fallen from about US$70 billion in 2011 to about US$44 billion in 2012. IIF estimates it will reach about US$38 billion by the end of this year. And with US$1.5 billion a month accumulating in restricted accounts, some US$15 billion of the US$38 billion surplus may be out of reach.