If some restrictions eased, importers of Iran’s petrochemicals may increase purchases - expert

Business Materials 4 November 2013 10:34 (UTC +04:00)

Azerbaijan, Baku, Nov. 4 / Trend, S. Isayev

If some restrictions on Iran's blocked assets are eased, importers of Iran's petrochemicals may be allowed to increase their purchases, professor of economics at U.S. Northeastern University, Kamran Dadkhah told Trend.

Dadkhah was commenting on Iran's petrochemical and condensate exports dropping the last solar year, and how the country can boost its exports.

Iran's petrochemical and condensate exports dropped by 33 percent the last solar year, compared to preceding year, and as well as dropped by more than 12 percent during first 7 months of current solar year, compared to the previous one.

Condensate exports dropped as well by 20 percent during last year, and by more than 30 percent during the last 7 months.

"Sanctions against Iran's petrochemical industry were imposed by the European Union in January 2012. In May 2013 the United States sanctioned 8 petrochemical companies of Iran," Dadkhah said. "These sanctions will not be removed in the near future."

"Indeed, they cannot be removed without giving the impression that the West does not have a well thought and clear-cut policy regarding Iran's nuclear program and plays the game one day at a time," he added.

The U.S. and its Western allies suspect Iran of developing a nuclear weapon - something that Iran denies. The Islamic Republic has on numerous occasions stated that it does not seek to develop nuclear weapons, using nuclear energy for medical researches instead.

Kamran Dadkhah went on to note that regarding the sanctions, in general, there are two points of view in the United States and in the West.

"On one side - the Obama administration that argues for a hold on further sanctions in order to give diplomacy time to bear fruit," he said. "In general, a policy position, adopted by Susan Rice (the National Security Advisor to the President), suggests that the United States should not focus all its foreign policy attention on the Middle East. Moreover, it does not advocate direct action against countries in the region."

"On the other hand, many in the United States Senate and in some European countries believe that Iran is not sincere and its strategy is to buy time in order to complete its nuclear weapons program," Dadkhah underscored.

"They note that the current approach taken by Rouhani administration is due to the disastrous condition of the Iranian economy.

"The sanctions, they believe, have been at least partly responsible for the miserable situation of the economy. Therefore, in order to finalize a deal with Iran, sanctions need to stay in place and even intensified," Dadkhah believes.

He went on to add that a number of the United States allies including Israel and Saudi Arabia are supportive of this point of view.

He said that regardless of which side's view (the US administration or the Senate and the US allies) prevail, there will be no immediate lifting of sanctions or exempting of certain industries, for example, petrochemicals.

"Indeed, the EU is reinstating some of the sanctions successfully challenged by Iran in European courts. Therefore, if the United States or the European Union want to reward Iran for its compliance with certain Western demands, it has to be specific, limited and easily reversible," he said.

Dadkhah went on to add that there is a possibility of easing some financial restrictions so that Iran can access its income blocked in some countries. In this case, according to the expert, in the same way current importers of Iran's petrochemicals may be allowed to increase their purchases.

"Such a move will enable Iran to earn close to a billion dollars more than what is projected to receive by the end of the current Iranian year," he said. "But even these modest changes could run into opposition domestically and internationally."

According to Bloomberg, more than $50 billion of Iranian money is frozen, or semi-frozen, in banks around the world.

Dadkhah previously told Trend that lifting sanctions is problematic because a few days down the road negotiations may stall and re-imposing sanctions would be difficult.

Dadkhah went on to say that if the US does lift some of the sanctions, this move could be useful to both sides, if it is done as a part of a larger agreement and without emphasizing particular features of this option.