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1.20.2006
  Ahead Of UN Sanctions, Iran Starts Playing The Money Game
Embroiled in a nuclear standoff with the West, Iran said on Friday it was moving funds out of Europe to shield them from possible U.N. sanctions.

"Yes, Iran has started withdrawing money from European banks and transferring it to other banks abroad," said a senior Iranian official, who asked not to be named.

Central Bank Governor Ebrahim Sheibani was quoted earlier as saying Tehran had started shifting funds, but he sidestepped a question on whether the assets would go to accounts in Asia.

Financial markets reacted nervously to the uncertainty about Iran's foreign holdings, estimated at more than $30 billion, helping send oil to a four-month high above $67. The dollar dipped against the euro and the safe-haven Swiss franc.

It is far from clear how placing assets in Asia or anywhere abroad would protect them from being frozen as few governments or major banks would be willing to flout U.N. sanctions openly.

The council has the power to impose trade or diplomatic sanctions, though no swift action to punish Iran is likely.

Anxious to maintain neutrality, IAEA chief Mohamed ElBaradei has refused an EU request to speed up a report on Iran's atomic activities in time for the February 2 meeting, diplomats said.

Officials close to the IAEA said ElBaradei also felt Western pressure to refer Iran to the Security Council at the meeting was premature. Diplomats said he had promised the Iranians they would have until the next regular IAEA board on March 6 to meet his demand for better access to nuclear sites and documents.

The EU trio scrapped the talks last week after Iran removed IAEA seals on uranium enrichment equipment and resumed a suspended nuclear research program. U.S. and EU officials say there can be no more talks unless Tehran reverses these steps.

Iran is trying to avoid U.N. censure or sanctions over its nuclear program, which it says is entirely peaceful. The West suspects it of secretly seeking nuclear weapons.

Talk of shifting foreign assets indicates how seriously the Islamic Republic is taking the threat of U.N. sanctions. Iran has bitter memories of its U.S. assets being frozen shortly after the 1979 Islamic revolution.

Shailesh Dash, head of strategic asset management at Kuwait's Global Investment House, said Iran might seek friendly havens for its funds in the Gulf or Asia.

"It's a similar pattern to that which we have seen for the Gulf countries after September 11. If you feel there is a risk of the U.S. imposing sanctions then it makes sense to move those assets to friendly countries, such as the Gulf or Asia."

Swiss banks would welcome asset transfers by Iran, a leading financial industry representative in Geneva said.
 
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