China's Xi To Visit Iran, Calls For Lifting US Sanctions
Chinese and Iranian presidents called on Thursday for the lifting of sanctions on Iran as an integral part of a stalled international accord on its nuclear program.
Chinese and Iranian presidents called on Thursday for the lifting of sanctions on Iran as an integral part of a stalled international accord on its nuclear program.
China’s Xi Jinping also accepted an invitation from Raisi to visit Iran and would do so at his convenience, the two leaders said in a joint statement on the last day of a three-day state visit to China by Raisi.
The leaders called for the implementation of the 2015 Iran nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA).
In 2018, the then US president, Donald Trump, withdrew the United States from the deal and ordered the reimposition of sanctions on Iran.
President Joe Biden said in 2021 that the United States would return to the deal if Iran moved back into compliance, but talks have stalled since September 2022.
"All relevant sanctions should be fully lifted in a verifiable manner to promote the full and effective implementation," Xi and Raisi said.
China and Iran emphasized that lifting sanctions and ensuring Iran economic benefits were important components of the agreement.
On Tuesday, Xi told Raisi that China would "participate constructively" in talks to resume negotiations on implementing the agreement, while expressing his support for Iran in safeguarding its rights and interests.
"China firmly opposes interference by external forces in Iran's internal affairs and undermining Iran's security and stability," the leaders said in the statement.
The two leaders also drew up several initiatives, including promoting e-commerce and agriculture, but no major deal has yet been announced that could help Iran alleviate a serious economic crisis it faces.
According to a confidential letter addressed to First Vice-President Mohammad Mokhber by his advisor, Iran has $8.5 billion in funds from exports of gas and electricity that is frozen in Iraq as a result of US sanctions.
In the letter, issued in early-February, the advisor, named Alavi, claimed that Iran is losing $5 million per month due to the “Negative Interest Rate.” He also added that the funds that are kept in Iraqi currency dinar are also losing their value.
The letter also reveals that the Central Bank of Iran is printing money on the basis of the frozen funds without being able to receive the money to add it to its reserves. It means that the printed money has no real back-up and aggravates inflation and leads to the devaluation of the rial, which hit new lows almost every day this week. According to the letter, Iran is printing one million rials for each dollar blocked in Iraqi banks, although the real exchange rate of dollar in Tehran is about 470,000 rials.
The biggest immediate reason for printing money is government borrowing from the Central Bank of Iran (CBI) to bridge its budget deficit estimated to be 50 percent. But the CBI has little gold or foreign currency reserves to back the rial banknotes it prints. The rial is not a fungible currency like the US dollar and no one invests in buying excess rials, the same way hard currencies function and maintain their value.
As Iran’s economic situation worsens, the Islamic Republic is printing money without backing and adds it to the money supply. Iran has been lavishly printing more money since 2018 when the United States imposed economic sanctions after it withdrew from the Obama-era nuclear accord known as the JCPOA.
The advisor also warned Mokhber about the funds that are spent on essential goods, which are not included in the US sanctions, saying that the money should be spent on other goods. He also said that some of the money is spent through trust funds that are under the audit by the US Office of Foreign Assets Control, and therefore can be tracked by the OFAC and put under further restrictions.
Iraq is seeking accession to the Paris-based Financial Action Task Force (FATF), the money-laundering watchdog that has blacklisted Iran. The FATF blacklist carries with it no formal sanctions, but financial institutions shift their resources and services away from blacklisted countries so as not to risk legal complications. The leaked letter can be an indication that the Islamic Republic has to find new ways to transfer money across the region, especially to fund its proxy forces.
On Saturday, February 11, Iraqi Foreign Minister Fuad Hussein -- accompanied by Central Bank of Iraq Governor Ali al-Allaq -- met with Secretary of State Antony Blinken, Deputy Secretary of the Treasury Wally Adeyemo, and other US officials and business leaders in Washington to discuss a host of economic issues. But an urgent issue was how to prevent Iran from using Iraq’s banking ties with the United States to launder US dollars and circumvent Washington’s sanctions.
In early February, Iran International obtained information that revealed some details about the inner workings of a Revolutionary Guard’s Quds force unit tasked with smuggling money from Iraq to Iran. According to the information, the IRGC and the Islamic Republic’s embassy in Iraq are involved in the money laundering operations that aim to funnel the regime’s revenues from oil and gas exports back to Iran. As per a repeatedly extended sanctions’ waiver by Washington, Tehran is only allowed to import medicine and some essential goods in exchange for its exports of gas and electricity to its neighboring country.
Earlier in the month, Abdol-Amir Rabihavi, the business adviser of the Islamic Republic in Iraq, claimed Iran’s exports to Iraq are on the rise approaching $10 billion despite pressure by the United States on Baghdad to stop the IRGC’s money smuggling from the Arab country.
According to an article by Forbes, Iran is thought to have well over $100 billion in funds trapped in banks in Iraq, South Korea, Japan, Canada and elsewhere.
