from Follow the Money

Why tracking petrodollars is hard …

January 20, 2006

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The latest news:  Iran, worried about sanctions, is shifting its assets from Europe to Southeast Asia.   Iran probably holds its reserves in euros, not dollars -- but if it did hold dollars, they certainly would not show up in the US data.

The FT:

Iran is moving foreign exchange out of European banks in advance of a possible referral to the United Nations Security Council and imposition of economic sanctions over its nuclear programme.


Ebrahim Sheibani, Central Bank governor, told reporters on Friday that Iran would "transfer the foreign exchange reserves wherever we consider expedient" and confirmed a shift from Europe had begun.

Mr Sheibani refused to give details or to say where the funds were going, although ISNA, the semi-official Iranian news agency, said the destination was south-east Asia.

... The Central Bank manages Iran's "windfall" oil revenue in the Oil Stabilisation Fund, which Mr Sheibani said would contain about $15bn by the end of the Iranian year in March. Iran keeps an unknown amount of this in Europe.

The Iranians are also worried that their European assets could be seized by the courts because of a US law that holds states accountable for ties to terrorists - a law that the Italian courts upheld.

Davoud Danesh-Jafari, Iran's economy minister, said on Thursday the seizure of Iranian assets was both contrary to "global regulations" and damaging for Europe's banks.

"Such acts would make oil-rich countries anxious to transfer their capital out of European banks into safer places," he said.

Iran has more to worry about than other oil-rich countries.  

But there is a general desire -- including from oil states that have better relations with the US than Iran --  not to hold assets in ways that can get caught up in the US legal system.

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