Iran’s blocked funds in India are shy of all the money raised through Iran’s capital markets in the year ending March 21, 2015, highlighting the significance of the frozen funds and assets.
Iran has $8.8 billion in oil revenue blocked in India due to economic sanctions, according to the Iranian vice president Mohammad Baqer Nobakht.
Iran is under sanctions by the United Nations, European Union and the United States over its nuclear program. The sanctions which among other things block the Iranian banking system from dealing with international banks have hit the country’s economy. Reportedly, Iran has around $130 billion blocked overseas, though no official figure has been released.
The importance of Iran’s frozen assets is shown when you consider that $8.8 billion (292.7 trillion rials) were raised in debt and equity through Iran’s capital markets in the last fiscal year, according to the Securities and Exchange Organization.
Sanctions have left $8.8 billion of Iran’s money from crude oil sales stranded in Indian banks, Nobakht, who is also the head of the Management and Planning Organization, said on Friday.
After the intensification of sanctions in 2010 and an EU oil embargo, India has been one of the few major buyers of Iran’s petroleum exports, leaving a major part of Iran’s oil revenues to be accumulated in Indian banks.
“Iran is barred from these funds and can only access them when the sanctions are lifted,” said Nobakht.
Under an interim deal reached in Geneva in November 2013, Iran was allowed to sell around one million barrels of oil per day. The money from those sales is paid into escrow accounts in the purchasing countries.
Unfrozen Money
A small portion of Iran’s petroleum earnings were released to the central bank to manage the economy and foreign exchange market.
Since the signing of an interim deal between Iran and the five members of the UN Security Council plus Germany in November 2013, Iran has received $11.9 billion. Under the deal, Iran agreed to limit certain aspects of its nuclear activities, in exchange for sanctions relief – including the release of some of Iran’s oil revenues.
Iran and the six world powers are working to reach a final agreement over Iranian nuclear energy activities before the end of June. A new round of talks between the two sides over the text of the final agreement will start in Vienna on Tuesday.
It is unclear what Iran will do with its oil revenues, once sanctions are lifted. The government could easily go into a spending spree, stoking inflation and stifling growth. Apart from normal business relations with the world and the possibility of attracting foreign investment, release of $130 billion to a $368.9 billion economy could make or break it.
