Institute says Iran's frozen assets smaller than Obama claims

02 September 2015

US analyst says figures are overstated

  • Patrick Clawson from Washington Institute for Near East Policy challenges Washington’s figures
  • The pre-deal asset freeze did not have as great an impact on the Iranian government as some statements from Washington suggested,” he says

The value of Iranian assets frozen or held in escrow accounts that are due to be released after nuclear-related sanctions imposed by the UN, the EU and the US are lifted is lower than US officials say, according a report published on 1 September by Patrick Clawson, research director at the Washington Institute for Near East Policy (WINEP).

The Islamic Republic is reported to have at least $100bn in frozen and escrow accounts. In a webcast about the nuclear deal on 28 August, US President Barack Obama said: “[Iran] will get about $56bn back, but they’re going to have to spend that to prop up an economy that’s been crushed by our sanctions.”

Clawson challenges both figures. “The Obama administration has long overstated the extent to which economic sanctions froze Iranian assets and the impact these actions had on the regime,” he says in the WINEP report.

Iran foreign assets
AssetValue ($bn)
Frozen financial and other assets in the US 1,973
Frozen real estate assets in the US 2,000*
Amounts owed by EU companies5,000*
Escrow account assets for oil sales since 2013 50,000
Iranian bank foreign assets65,000**
Central Bank of Iran foreign assets52,000**
*=This is a MEED estimate; **=Figures from annual reports and other documents published by the Central Bank of Iran and adjusted to dollars at $1=IR30,000. Sources: Iran’s ‘Frozen’ Assets: Exaggeration on Both Sides of the Debate, Patrick Clawson, Washington Institute for Near East Policy, Washington DC 1 September 2015; Central Bank of Iran; MEED

Clawson lists Iran’s frozen and escrow assets as:

  • Assets frozen by US courts that cannot be used by their owners: The Treasury Department’s most recent Terrorist Assets Report says there are $1.97bn of Iranian financial assets frozen in the US and $19m of unfrozen assets. These include those belonging to Iran’s UN mission. The Treasury report, however, does not include tangible property. A US court has frozen 650 Fifth Avenue in New York City, which could be worth more than $800m, and other Iranian real estate assets in the country.
  • Other frozen assets: Due to EU financial restrictions, Iranian banks and companies cannot access assets in Europe or assets owed by Europeans. These include $2.3bn that UK/Dutch Shell owes National Iranian Oil Company (NIOC) for oil supplied before sanctions were tightened in 2011.
  • Escrow account assets: These are amounts held in special accounts as a result of sales permitted under sanctions relaxed after 2013. Most of this relates to sales to China, Japan, India, and South Korea. It is estimated that such assets are worth $50bn or more. The Central Bank of Iran has said $20bn of this money has already been committed to future Iranian purchases.
  • Foreign assets on the balance sheets of Iranian banks: As of the close of the financial year ending 21 March 2015, Iranian banks had foreign assets worth $65bn, according to figures published by the Central Bank of Iran. However, this is likely a serious overstatement of their real value, Clawson says. He says loans to Syria and some foreign energy projects are irrecoverable. Companies managed by the Oil Ministry are reported to have invested $22.4bn in energy projects in China. These loans are reported to be non-performing.
  • Central Bank assets: These are accounting items on the bank’s balance sheet that have matching liabilities, Clawson says.

Clawson says some of the assets are not owned by the Iranian authorities and will not be available to Tehran when sanctions are lifted.

“The pre-deal asset freeze did not have as great an impact on the Iranian government as some statements from Washington suggested,” he says. “Going forward, the post-deal relaxation of restrictions will not have as great an impact as some critics of the deal suggest.”

MEED estimates the gross value of foreign assets held by Iranian government agencies and private companies and individuals is at least $250bn (see table above).

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