TEHRAN, Jan 21, (Agencies): Iran’s Revolutionary Guard Corps said on Saturday it considered the likely return of US warships to the Gulf part of routine activity, backing away from previous warnings to Washington not to re-enter the area.
The statement may be seen as an effort to reduce tensions after Washington said it would respond if Iran made good on a threat to block the Strait of Hormuz — the vital shipping lane for oil exports from the Gulf.
“US warships and military forces have been in the Persian Gulf and the Middle East region for many years and their decision in relation to the dispatch of a new warship is not a new issue and it should be interpreted as part of their permanent presence,” Revolutionary Guard Deputy Commander Hossein Salami told the official IRNA news agency.
The apparently conciliatory comments may be a response to the European Union and Washington’s rejection of Iran’s declaration it was close to resuming negotiations with world powers and with the Pentagon saying it did not expect any challenge to its warships.
Crude prices have spiked several times this year on fears diplomatic tensions could escalate to military clashes as well as uncertainty about the effect of sanctions on the oil market.
Along with the EU, which is set to agree an embargo on Iranian oil next week, Washington hopes the sanctions will force Iran to suspend the nuclear activities it believes are aimed at making an atom bomb, a charge Tehran denies.
There has been no US aircraft carrier in the Gulf since the USS John C. Stennis left at the end of December at a time when the Revolutionary Guard was conducting naval manoeuvres.
On Jan. 3, after US President Barack Obama signed new sanctions aimed at stopping Iran’s oil exports, Tehran told the Stennis not to return — an order interpreted by some observers in Iran and Washington as a blanket threat to any US carriers.
“I recommend and emphasize to the American carrier not to return to the Persian Gulf,” Iran’s army chief, Major General Ataollah Salehi, said at the time. “We are not in the habit of warning more than once.”
Washington says it will return to the Gulf and Defense Secretary Leon Panetta said any move to block Hormuz — through which around a third of the world’s sea-borne traded oil passes — would be seen as a “red line”, requiring a response.
Citing operational security, the Pentagon will not say when the next carrier will return to the Gulf but officials say it is only a matter of time and they do not expect any problems.
In the coming days or weeks, the Revolutionary Guard will begin new naval exercises in the Strait of Hormuz and the Gulf. Salami told IRNA these would go ahead as planned in the Iranian month of Bahman which runs from Jan 21 to Feb 19.
Iran has said it is ready to return to talks with world powers that stalled one year ago, but the West, concerned about Tehran’s move of the most sensitive atomic work to a bomb-proof bunker, says it must first see a willingness from Tehran to address the nuclear issue.
French President Nicolas Sarkozy said on Friday “time is running out” for a diplomatic solution and urged Russia and China to drop their opposition to sanctions on Iranian oil.
Iran is OPEC’s second biggest exporter and blocking its crude exports — through the EU embargo or US moves to punish banks that trade with Iran — could have a devastating impact on its economy but there are no signs so far such pressure would force it to stop what it calls its peaceful nuclear rights.
Pressure
The US Treasury Department is under bipartisan pressure to draft tough rules implementing an Iranian sanctions law enacted in December. While the effect on US financial institutions is likely to be minimal, foreign financial institutions may take a hit.
“To me, the important question is the extent to which we’ll see non-US banks cut off from the US financial system because of continued processing of transactions involving Iran, particularly Iran’s energy sector, and whether petroleum trading will be pushed into other currencies by Iran,” a former Treasury official told Thomson Reuters. “Watch for changes one to six months from now when more of the law is required to be implemented.”
US lawmakers crafted Section 1245 of the National Defense Authorization Act for fiscal year 2012 to reduce Iran’s oil revenue as punishment for what the United States says is a program to develop a nuclear-weapon capability. Among other things, it prohibits financial institutions from dealing with Iran’s central bank, which acts as the clearinghouse for OPEC’s second-largest oil exporter.
Section 1245 states that US financial institutions should be prohibited from opening or maintaining correspondent or payable-through accounts for any foreign financial institution that has “knowingly conducted or facilitated any significant financial transaction with the Central Bank of Iran.”
The new US measures target both private and government-controlled banks, including central banks, and would come into force after a two- to six-month warning period depending on the transactions.
The law allows US President Barack Obama to exempt institutions in countries that have “significantly” reduced their dealings with Iran, and permits him to grant waivers to protect national security interests and energy market stability. But two US senators on Thursday warned Treasury Secretary Timothy Geithner not to weaken the law by writing rules ridden with loopholes.
Tensions
In Beijing, China told a visiting Iranian delegation that returning to nuclear talks was a “top priority,” the Xinhua news agency said on Saturday, in a meeting highlighting Beijing’s efforts to reduce tensions that could threaten its oil supply.
The delegation, led by Supreme National Security Council deputy secretary Ali Baqeri, visited Beijing as lawmakers in the United States moved to detail punishment of foreign banks that do business with the Iran’s central bank, the clearinghouse for its oil exports.
The United States hopes the sanctions will prevent Iran from developing what it says is a nuclear weapons programme. Iran says its nuclear programme is for civilian use.
“China believes the Iran nuclear issue should be resolved peacefully through dialogues and negotiations, and that sanctions and military means will not fundamentally address the problem,” Xinhua said, citing Chinese Assistant Foreign Minister Wu Hailong at the Friday meeting.
Xinhua said the Iranian side “expressed its willingness to resume talks” with six countries involved in discussions and to “strengthen cooperation” with the International Atomic Energy Agency, the UN’s energy watchdog.
The US measures could potentially impact China, the largest buyer of crude from Iran, although the law allows an exemption for institutions in countries that have “significantly” reduced their dealings with Iran .
China has halved its imports from Iran in January and February, following a dispute over the terms of payment .
The threat of further sanctions has set off a round of diplomacy, with US Treasury Secretary Timothy Geithner visiting Beijing and Tokyo this month, followed by a tour to Arab states by Chinese premier Wen Jiabao.
Wen made a strong statement during his tour opposing Iran developing and possessing nuclear weapons, but defended China’s right to buy Iranian crude oil as normal trade activity.
The Obama administration this month invoked US law to sanction China’s state-run Zhuhai Zhenrong Corp, which it said was Iran’s largest supplier of refined petroleum products. China opposed the sanctions.
That company does little business involving the United States, but state-owned Sinopec Corp , which processes most of China’s Iranian crude imports, has a much larger international presence.
China has in the past consistently urged talks to defuse the Iranian nuclear issue.
Failure
Meanwhile, the United States and its European allies joined Friday in saying they would try to pressure Iran back into nuclear negotiations despite the Islamic republic’s failure after three months to answer the nations’ terms for talks.
Secretary of State Hillary Rodham Clinton said the US and its partners were making it clear to Tehran that it was headed down a “dangerous path” with its pursuit of nuclear weapons and threats to close off the Strait of Hormuz - through which much of the world’s fuel travels to reach international markets.
“Iran does have a choice to make,” Clinton told reporters in Washington after meeting German Foreign Minister Guido Westerwelle.
“It can come back to the table ... and address the nuclear program concerns that the international community rightly has, or face increasing pressure and isolation,” she said. “The country can be reintegrated into the global community, able to share in the benefits, when their government definitely turns away from pursuing nuclear weapons.”
Clinton spoke after the European Union released a letter it sent to Iran in October, imploring renewed talks to answer the international concerns about Iran’s uranium enrichment activity. The West fears it is aimed at developing nuclear weapons, but Tehran insists the work is for energy and research purposes.
EU foreign policy chief Catherine Ashton said Friday the international community remained open to talks with Iran, even as a blocwide embargo on Iranian oil appeared set for approval Monday. She said world powers have shown a “continued willingness to engage” Iran, but have received no reply to their Oct 21 offer of more talks.
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TEHRAN, Iran: Iran’s national currency fell by 11 percent Saturday amid the government’s refusal to sign off on a move to raise bank interest rates, state news agencies reported.
The semiofficial Fars news agency said the the country’s currency, the rial, was trading at nearly 20,000 to the US dollar on Saturday on the black market, compared to 18,000 rials a day earlier.
The rial was trading at around 10,500 riyals to the US dollar in late December 2010.
The Iranian currency strengthened last week after Iran’s Money and Credit Council approved an increase in bank interest rates to 21 percent to absorb liquidity into the banks. Traders said President Mahmoud Ahmadinejad’s refusal to give the green light to raising bank interest rates has prompted a new devaluation of rial.
Iranian police have rounded up currency exchangers, saying any transaction of foreign currency is considered “smuggling.”
The government has ordered a rate of 14,000 rials per US dollar to money exchange shops. But there is no exchange of currency based on the rate.
Iran’s central bank declared last week that trading foreign currency outside of banks and licensed currency exchange operations was banned.
The currency came under heavy pressure after new US sanctions targeting Iran’s central bank and oil industry were approved. Shortly after President Barack Obama signed the sanctions into law, the rial lost about 13 percent of its value relative to the dollar. The sanctions have not yet gone into effect.