Sanctions from US costing Iran investment, banking

There are many situations which may adversely effect the business of certain countries. Iran is finding it increasingly difficult to access the financial services it needs to run its economy and may lose up to $60 billion in energy investments due to global sanctions, US officials said Wednesday.

The officials told US lawmakers that United Nations-backed sanctions imposed over the summer are inflicting economic pain on Tehran and hampering its drive to develop nuclear weapons.

“With great regularity, major companies are announcing that they have curtailed or completely pulled out of business dealings with Iran,” Stuart Levey, US Treasury undersecretary for terrorism and financial intelligence, told the House of Representatives Committee on Foreign Affairs. There are some more conditions.

“And, as has been widely reported, Iran’s leadership appears to have underestimated the severity and effects of the global financial measures, giving rise to internal Iranian criticism and finger-pointing,” Levey added.

Levey said the sanctions were restricting Iran’s access to dollars and were the likely cause of a nearly 20 percent plunge in Iran’s rial currency in September, prompting weeks of intervention from Iran’s central bank to stabilize it.

A UN Security Council resolution calling for increased sanctions to curb Iran’s nuclear and missile activities paved the way for tougher US and European Union measures to cut off financial services and energy sector investment from Iran.

Undersecretary of State William Burns told the panel Iran may lose $50 billion to $60 billion in potential energy investments, along with critical technology and know-how from major international companies.

“Sanctions have hindered Iran’s development of a nuclear weapons capability and the means to deliver them, while making it harder for Iran to continue its destabilizing activities in the region,” he added in prepared remarks.

Seventeen Iranian banks are now blacklisted by most major financial centers and the United States has passed a law that effectively forces international financial institutions to choose between doing business with Iran or the US.

A few years ago, Iran was able to deal with the world’s largest and most prestigious banks, Levey said, but now it is “relegated to the margins of the international financial system, and is finding it increasingly difficult to access the large-scale, sophisticated financial services necessary to run a modern economy efficiently.”