Daily Israel Report

U.S. Treasury: Sanctions Hurting Iran's Access to Global Capital

Western sanctions on Iran have contributed to a drop in its access to global sources of capital last year, says the U.S.
By Elad Benari
First Publish: 2/8/2013, 4:43 AM

Iranian rial
Iranian rial
AFP/Ali al-Saadi

Western sanctions on Iran have contributed to a drop in the Islamic Republic's access to global sources of capital last year, the U.S. Treasury department said in a report to Congress on Thursday.

Foreign banks cut their lending exposure to Iran by the equivalent of $9.1 billion in 2012, down 53 percent, according to the report which was obtained by the Reuters news agency.

The report said that broader international sanctions against Iran and other perceived weaknesses in the investment climate in Iran also contributed to the drop.

The White House said several weeks ago that the sanctions on Iran had a “profound impact.”

The comments came after Iranian President Mahmoud Ahmadinejad said that Tehran needed to tailor the economy to subvert Western sanctions, saying the current approach would be a "losing strategy."

Previously, Ahmadinejad steadfastly denied that the sanctions are hurting the economy, until Iranian Oil Minister Rostam Qasemi broke ranks and admitted that the sanctions have sliced oil exports by 45 percent.

The Iranian President said in the past that while the sanctions "have led to a drop in our oil", they did not break down Iran's economy as the West had hoped.

This past week Iran’s currency plummeted to an all-time low, registering a more than 21-percent drop in a span of two weeks against the U.S. dollar.

The rial was traded at between 39,000 and 40,000 per dollar on the open market on Saturday, down from about 33,000 two weeks ago.