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Iran knocks bank boycott, considers dumping dollars

Section: Daily Dispatches

Iran Vows Legal Action
on U.S. Move Against Bank Saderat

From Agence France-Presse
via Financial Express, Mumbai
Sunday, September 17, 2006

SINGAPORE, Sept 16 -- Iran has vowed to take legal action to challenge US sanctions on the Iranian lender Bank Saderat and has said it is considering shifting some of its foreign exchange reserves out of the dollar.

"We intend to take all legal recourse available to us and expect the International Monetary Fund (IMF) ... also to take an appropriate stance against this unilateral and illegal action, which can seriously disturb international payments," the head of the Iranian central bank, Ibrahim Sheibany, told the newspaper Emerging Markets in an interview appearing here Saturday.

The US Treasury Department announced September 8 it had taken steps to prevent Bank Saderat, one of Iran's largest lenders, from doing any business with US-owned banks on grounds that it supports terrorism.

"Bank Saderat facilitates Iran's transfer of hundreds of millions of dollars to (the Lebanese Shiite movement) Hezbollah and other terrorist organisations each year," said Stuart Levey, undersecretary for terrorism and financial intelligence.

Sheibany told Emerging Markets: "This move may cause us to distance ourselves from (the dollar), and I'm sure other countries are looking at us. Even now we are using other currencies, and this encourages us to get away from the dollar."

He said Iran could place its oil-generated revenues into "neighbours' banks," such as those in Saudi Arabia or Bahrain, and added: "We also have very good relations with European banks."

US Treasury Undersecretary Tim Adams told reporters earlier this week that financing for terrorism and "proliferation activities" would be on the agenda for Saturday's meeting here of finance ministers from the Group of Seven (G7), Britain, Canada, France, Germany, Italy, Japan, and the United States.

"Keeping the global financial system free from illicit activities, from those who seek to use it for proliferation of weapons of mass destruction and other activities is vital," he said.

Sheibany insisted that the US action was "100 percent political."

"Our banks are very transparent," he said.

He said Iran's specific challenge to the sanctions had yet to be determined but stressed that Tehran would "actively pursue" its arguments both legally and through the IMF, according to Emerging Markets.

Saturday's G7 meeting will be followed by the annual assembly here of the IMF and the World Bank.

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