Following the Iran nuclear deal, Washington announced it would begin lifting economic sanctions against Tehran. Iranian banks were allowed to reconnect to the SWIFT communications network, which handles international payment transactions, the ban on Iranian oil exports was lifted, and Washington finally decided to unfreeze Iran’s financial assets held abroad (the assets were seized in 2012). No-one really knows the volume and structure of these assets. Some Iranian officials have put the total amount at $130 billion, while the Institute of International Finance in Washington has estimated it at $100 billion.
The foreign exchange reserves of the Central Bank, as well as the National Development Fund of Iran, account for a significant proportion of these assets. In January 2015, US Secretary of State John Kerrydeclared that $55 billion in frozen assets could be released to Iran.The Central Bank of Iran is using different figures, however. According to the Central Bank’s governor,Valiollah Seif,the amount in question is $32.6 billion.Either way, the amounts are considerable.
Anticipating that its foreign financial assets would be seized back in the 2000s, Iran organised for them to be moved to safer havens. From the point of view of Iranian experts, these were banks outside the jurisdiction of the US and Western Europe. Iran’s assets were withdrawn from Western banks and placed in banks in China, Japan, South Korea, Turkey and Taiwan. The Iranian experts miscalculated, however. Washington was able to get at Iran’s money even there, a fact that should also be borne in mind by Russia, against which the West can still use weapons like freezing its foreign exchange reserves.
The confiscation of Iran’s foreign exchange reserves
In April, Tehran’s joy at the unfreezing of its foreign exchange reserves proved to be short-lived. The US Supreme Court refused to return $2 billion in frozen assets to the Central Bank of Iran and ruled that the money should be sent to the families of Americans killed in terrorist attacks for which Iran is allegedly responsible. This refers to the 1983 terrorist attack in Beirut, in which 241 American soldiers were killed. The US Supreme Court found Iran’s ‘fingerprint’ in the attack that took place 33 years ago. The claim is far-fetched and has been refuted many times by both Iranian and Western experts (in 2001,Caspar Weinberger,who was the US Secretary of Defense at the time of the tragedy in Lebanon, acknowledged that there has never been any reliable information regarding those behind the attack in Beirut).
Appetite comes with eating, and the US authorities that confiscated $2 billion of Iran’s reserves also prepared another decision. The US court found Iran’s fingerprint in the events of 11 September 2001 and ordered Tehran to pay $7.5 billion in compensation to the families of those Americans killed in the attack (based on $2 million per victim). In addition, Tehran was ordered to pay $3 billion in compensation to those insurance companies that covered damages from the 2001 terrorist attack. There is no real evidence to support the claim that Iranian authorities were involved in the preparation and carrying out of the terrorist attack. Tehran is not going to comply with the US court’s decision, so the US authorities are preparing a resolution on yet another confiscation of Iran’s foreign exchange reserves to the tune of $10.5 billion.
The second target – Saudi Arabia
There is every likelihood that Iran is just the beginning, that Uncle Sam is practising on Iran. And Uncle Sam prefers the term reparations to confiscations. According to the US, it is about compensating for damages incurred by America and its citizens during a variety of military and terrorist attacks. The next victim of these reparations/confiscations is Saudi Arabia.
A bill entitled “Justice Against Sponsors of Terrorism” is currently being prepared in the US Congress that will allow the families of 9/11 victims to sue those states involved in the 2001 terrorist attack. Although the document does not mention any states, everyone knows that the bill is directed specifically at Saudi Arabia. In 2014, Saudi Arabia’s international reserves amounted to almost $750 billion. This dwindled following the collapse in oil prices, but the country’s reserves still total just short of $600 billion today. That’s some tasty morsel for Uncle Sam!
At present, relations between Washington and Riyadh are complicated and the reparations/confiscations scenario is highly likely. Riyadh has already stated that it may withdraw its foreign exchange reserves, amounting to hundreds of billions of dollars, from the US. This raises at least two issues, however. Firstly, Saudi Arabia’s foreign exchange reserves should have been withdrawn earlier when relations between the two countries were still amicable. Now, Washington could block the large-scale withdrawal of reserves and assets. Secondly, even if Riyadh had withdrawn its reserves and assets from the US, there is still the issue of where they could be safely deposited. Iran’s unfortunate experience shows that Uncle Sam’s hand can not only reach banks in Europe, but also in Japan and South Korea, China and Hong Kong, and Turkey and Taiwan.
With regard to Chinese banks, they could not have been considered a reliable refuge for Saudi Arabia’s assets anyway, at the very least because the US Congress has started discussing the possibility of introducing economic sanctions against China. The time has come for Beijing to ponder scenarios like the possible freezing of its gigantic foreign exchange reserves. China is in an extremely vulnerable position, since its foreign exchange reserves are the largest in the world: as of 1 May 2016, they stood at $3.2 trillion. In addition, China has more than $1.24 trillion in US Treasury securities (plus its foreign exchange reserves deposited in US banks). To reduce its vulnerability, China is increasing the share of gold in its reserves, since this precious metal is immune to a variety of sanctions. Saudi Arabia cannot exchange its foreign exchange reserves for gold at the same rate as China and Russia, however, because, unlike these two countries, it is not a gold-producing country, and buying large amounts of gold on the global market is problematic (demand far exceeds supply).
Tehran regards Washington’s actions as “outright theft”
At the end of April 2016, the Iranian Foreign Ministry protested to Washington regarding the confiscation of $2 billion of Iran’s foreign exchange reserves. The Iranian media has referred to Washington’s actions as “outright theft”, and Tehran has decided to move from the defensive to the offensive. In May, the Iranian Majlis approved a bill calling on the government to sue the US and demand compensation for damages incurred by Iran as a result of US actions since 1953. The history of the subversive activities against Iran begins with the overthrow of the legitimate government on 19 August 1953 organised by US and UK intelligence agencies. Further down the list is the eight-year war between Iran and Iraq (1980-1988) instigated by Washington. The Majlis is demanding that compensation be paid to families for the deaths of 223,000 Iranians, as well as to the 600,000 veterans of the war with Iraq, and has invited the government to estimate the amount of the claim. Reparations payments for losses incurred as a result of the 37 years of economic sanctions introduced by Washington in 1979 occupy a special place in the statement of claim to the US.
On the monetary evaluation of American civilisation
There is a short epilogue to this story. In May 2016, the US president completed a tour around the countries of Asia. In several of these, the US has committed crimes against humanity, inflicting colossal material and moral damage on the peoples of these countries. This refers, first and foremost, to Japan. The atomic bombings of Hiroshima and Nagasaki in August 1945 fit completely with the modern definition of a ‘terrorist act’. Experts estimate that America’s atomic bombs claimed the lives of 300,000 people. There were also the genetic effects of the atomic bombs. Washington has never apologised for these barbaric acts, and Japan has never raised the issue of compensation for the damage caused. Let us suppose, however, that the compensation for each Japanese civilian killed would be equal to the compensation calculated by the US for the 1983 terrorist attack in Lebanon ($2 million per person). In this case, Japan could demand reparation payments from the US totalling $600 billion. And that is not counting the genetic damage currently affecting around a quarter of the Japanese population or the material damage caused by the destruction of buildings and structures in the atomic blast zones.
Barack Obama also visited Vietnam. Like Japan, Hanoi remained silent and did not present the US president with reparation claims relating to US aggression in the 1960s and 1970s. Yet from the use of toxic substances alone, at least five million Vietnamese citizens have developed diseases and genetic abnormalities. Incidentally, US soldiers were also affected by these chemicals, but they ultimately managed to get some compensation from their government. Based on the amount of compensation given to these US soldiers, compensation for damages caused to the people of Vietnam would run into the hundreds of billions of dollars.
With its reparation claims against the US, Iran will hopefully create a much-needed precedent that Japan, Vietnam, and other countries where America has enforced its democracy will take advantage of in the future.