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Iran eyeing rubles to free world of “dollar slavery”

Iran, the world’s fourth-largest oil producer, may use the Russian ruble in trading on its new oil exchange, the country’s ambassador to Moscow said.

“Big energy producers like Iran and Russia should try to free the world of dollar slavery” Ambassador Gholamreza Ansari said on Moscow’s Ekho Moskvy radio station Saturday. The two nations already co-operate in nuclear energy and may start closer coordination of natural-gas production. Russia holds the world’s largest gas reserves, followed by Iran, and together they produce of almost a fifth of the world’s oil. The two share the goal of finding alternatives to a weakened US dollar.  Iran plans to trade oil in more currencies than in its own rial to offer diversity, the ambassador said. The exchange will open Today, the country’s official IRNA news service said this week. Iran has planned to open the exchange since 2005. “I don’t think it would have any impact on the oil market at all,” said Kevin Norrish, an oil markets analyst at Barclays Capital in London. “I think it’s more political than related to oil market prices or dynamics.”

“The ruble should be used as a regional reserve currency,” Russian First Deputy Prime Minister Dmitry Medvedev said earlier yesterday in Krasnoyarsk, Siberia. Medvedev, who is also chairman of Russian gas exporter Gazprom, is the front-runner to replace President Vladimir Putin in March 2 elections. “The role of key reserve currencies is being reconsidered. We must take advantage of this,” Medvedev said in a speech outlining his economic priorities. Russia and other natural-gas producing countries should also form a group to co-ordinate production and sales of the fuel “as soon as possible,” Ansari said.

Iran a year ago proposed to set up a gas alliance similar to the Organization of Petroleum Exporting Countries. (OPEC) Iran’s foreign debt ratio has declined and its economic growth is expected to increase, the economy minister said yesterday, shrugging off the impact of international sanctions over Tehran’s nuclear program. Sanctions have had no impact on Iran’s economic condition Economy Minister Davoud Danesh-Jafari told Reuters on the sidelines of a meeting of the Islamic Development Bank in Tehran.

Analysts say western companies are becoming more wary of investing in Iran, the world’s fourth-largest oil exporter, due to perceived political risk and increasing difficulties in securing trade finance as a result of US pressure. The state-dominated Iranian economy is also struggling with double-digit inflation, which critics blame on the government’s profligate spending of petrodollars. But Danesh-Jafari painted an upbeat picture of Iran’s economy, saying foreign investment hit $10.27 billion last year. “Iran’s economy, despite unilateral economic pressure from America, has achieved stable growth ... and it is predicted that Iran’s economic growth will increase” he was quoted as saying by the ISNA news agency in a speech at the conference. He did not give details about his expectations for economic growth, which reached 6.7% year-on-year in the six months to September, according to the central bank. Iran’s foreign debt has declined to 13.5% of GDP from 17.4%, Danesh-Jafari said according to ISNA, whose report did not specify over what time period this happened.

The United Nations Security Council is considering a fresh round of sanctions on the Islamic Republic over its refusal to halt atomic work that the West fears is aimed at making bombs. Iran says it only aims to produce electricity. The draft UN resolution calls for asset freezes and mandatory travel bans for specific Iranian officials and vigilance on all banks in Iran. The US, leading efforts to isolate Tehran over its nuclear work, has imposed its own sanctions targeting four of Iran’s major banks and is also encouraging banks and firms from other countries to stop doing business with the country.

But Danesh-Jafari said Iran’s oil income “Tehran expects to earn about $63 billion in the Iranian year that ends in March helped it avert the impact of such measures. More than they were able to increase expenses for us we were able to make up for with oil income,” he told Reuters. Central Bank governor Tahmasb Mazaheri also played down the sanctions impact, saying Washington’s “hostile actions” caused some difficulties but no major problems for Iran. “The world is big enough for a country like Iran, not to be faced with problems as a result of these sanctions,” he told reporters. (