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Tehran's agreement with Western powers results in release of billions of dollars in frozen assets

Lifting of sanctions to benefit Iran

AFP-JIJI

Unblocking billions of dollars in funds to Iran under a landmark six-month nuclear deal with the West will have a significant economic and psychological impact on the Islamic Republic, experts said Monday.

Iran and Western powers announced Sunday that the deal will take effect from Monday.

Tehran agreed in November to roll back parts of its nuclear program and halt further advances in exchange for the release of billions of dollars in frozen assets and limited relief from crippling sanctions.

A senior U.S. administration official said that the first $550 million tranche of $4.2 billion in frozen assets will be released early next month.

“The installment schedule starts on Feb. 1 and the payments are evenly distributed” across 180 days, a senior U.S. administration official said.

Analysts say unblocking the funds will breathe new life into the economy and provide much-needed relief across Iran.

“The political and psychological effect will be (more) considerable” than the amount of funds involved, economic expert Saeed Leylaz said.

“It will be easier to sell our oil, our petrochemical products and recover our petrodollars. And all the products we buy abroad will cost 10 percent less,” Leylaz said.

The international community has slapped Tehran with punitive measures that strangled its economy, with the United States leading the way since Iran’s Islamic Revolution in 1979.

Washington tightened the noose over the years by imposing sanctions targeting Iran’s banking and oil sectors, as well as goods, services and technologies needed for its petrochemical industry.

The European Union has taken similar steps since 2010 and the U.N. Security Council has also approved four sets of sanctions since 2006.

The deal between Iran and the six world powers known as P5+1 foresees the six-month suspension of “certain sanctions on gold and precious metals, Iran’s auto sector, and Iran’s petrochemical exports.”

It will also “license safety-related repairs and inspections inside Iran for certain Iranian airlines” and unblock the $4.2 billion from sanctioned Iranian oil sales, according to an official statement released in November.

Leylaz says sanctions relief could bolster state coffers in the long run, and estimates that annual revenues will rise by $20 billion-$25 billion.

The increase will help the government control inflation, which officials put at 40 percent, and meet the demands of a population hungry for more consumer goods, he said.

The head of international relations at Iran’s national oil company, Mohsen Ghamsari, expects oil exports will grow if sanctions relief becomes a long-term exercise.

Ghamsari, in comments published by Iranian newspapers, said oil exports have already increased in recent months to 1.3 million-1.4 million barrels per day compared to 1.2 million.

According to Leylaz, Iran has sold $34 billion worth of oil and byproducts during the past nine months, earning $32 billion.

Former Tehran Chamber of Commerce official Mohammad Reza Behzadian said that with this “supplementary revenue, the government will be able to import consumer products which are needed by the population.”

“The government will also be able to pay its debts to private firms, and this will breathe new life into the economy,” he said.

U.S. analyst Mark Dubowitz said in an opinion piece in the Iran Daily on Monday that the economy has been recovering since the deal was struck and that this had changed the “market psychology.”

But a U.S. official has warned the sanctions relief will be terminated if Iran does not comply with the terms of the deal.

Abbas Araqchi, Iran’s top negotiator, said his country will keep to its side of the bargain — namely not to enrich uranium over 5 percent and to dilute or oxidize half of its 20 percent enriched uranium.