Iran Says Unfrozen S. Korean Funds Already In Europe

Foreign Ministry Spokesman Nasser Kanaani said that disclosing specifics to the media would not be "helpful" given the current circumstances.

During a press conference on Monday, Kanani said, "The details of this understanding in the media are not helpful at this point in time." The withholding of information comes in the face of increasing criticism and protests against the agreement, both within Iran and internationally, including in the United States and Israel.

However, Kanaani said that “the Iranian government had prioritized the release of its citizens unjustly detained by the American government, as well as the partial release of Iran's blocked assets, which had been frozen due to what Iran contends is illegal pressure by the United States.”

Notably absent from Kanani's comments was any mention of the release of American hostages imprisoned in Iran. When questioned about the timeline for the agreement's implementation, Kanani responded, "We negotiated with the American government through mediation, and a time frame has been set for the realization of both issues."

Refuting reports of $23 billion in released Iranian assets under the agreement, with $5 billion from Japan, Kanani stated, "I do not confirm either the $5 billion nor the other number you mentioned."

Iran's frozen funds are primarily held in banks across South Korea, Iraq, Japan, China, and India, originating from pre-2018 oil transactions prior to the United States' withdrawal from the JCPOA and subsequent sanctions.

Despite having paid for soybean and corn inputs over a year ago, the group of angry farmers from poultry production units in Qazvin province, have not received their orders from the Ministry of Agriculture, nor have they been reimbursed. Their accrued losses over this period amount to 100,000 billion rials ($200 million).

The protestors held placards berating the Ministry for placing them in a crippling financial situation and that they had reached breaking point.

They also raised additional concerns at the practice of government agencies buying their produced poultry at slashed prices using coercive measures and threats.

Supply of livestock and poultry production inputs is a systemic and ongoing issue. It has been more than a year since subsidies were reduced and cuts were made to the allocation of discounted foreign currency to essential goods importers. This has resulted in a disturbing cycle of shortages, delivery delays, and outright unavailability of necessary production inputs, negatively impacting the livelihoods of the country's livestock and poultry producers.

Hamidreza Khan-Mohammadi also raised concerns about the situation in schools located in Yazd and Tehran.

Speaking to the ILNA news agency on Sunday, Khan-Mohammadi highlighted the severity of the subsidence issue in Esfahan province, stating that "we have evacuated some schools" due to the problem. He assured that these evacuated schools would be renovated to strengthen them against the threat of land slippage.

The provinces of Tehran, Khorasan Razavi, and Esfahan are at highest risk of land subsidence, with Esfahan metropolis under particular threat. Khan-Mohammadi confirmed this emphasizing that Esfahan faced the greatest challenge of subsidence with limited cases being reported in Tehran. Yazd also experienced subsidence, which resulted in damage to schools, although the extent of damage was reported to be less significant.

Recent assessments indicate that around 4.24 million residential units in land subsidence zones lack proper structural support.

The issue of land subsidence extends beyond major urban centers to large construction projects. Across numerous regions in Iran, ground cracks and significant depressions resembling meteor craters have emerged on the surface in recent years.

According to experts, over-extraction of groundwater has played a pivotal role in the creation of underground cavities, resulting in the occurrence of land subsidence.

The Iranian currency has lingered just below 500,000 per dollar, a trend persisting for weeks. Consequently, the substantial inflationary pressures burdening Iran's economy are unlikely to abate soon, as long as US banking sanctions remain intact, obstructing the repatriation of hard currencies accrued from oil exports.

Shipments of crude remain high, with Iranian officials saying that the government’s target of 1.4 million barrels per day has been reached, but this does not mean Tehran is receiving full payments in dollars or euros from its main customer, China.

Meanwhile, additional media reports suggest not only a $6 billion release from South Korean banks, but also the unlocking of frozen funds in Iraq (estimated between 11-12 billion dollars) and over $3 billion from Japan. These funds will be held in Qatar and Oman, designated for Iran's purchases of essential goods such as food, medicine, and other humanitarian items.

Al Jazeera reported Sunday that up to $23 billion will be released from South Korea, Iraq and Japan although it will not bring a substantial boost to Iran’s economy. It hinted that the deal was not just a hostage release agreement, but it also aims at freezing Iran’s nuclear program at current levels. This begs the question if US sanctions will be enforced until the US presidential elections next year, or there is perhaps a secret deal to ease the pressure.

This is just part of the concerns critics of the deal in the United States have. The main objection to pay $6 billion for 5 hostages is the potential danger it creates for American citizens around the world, who can be arrested or taken hostage by an array of hostile actors, not excluding China and Russia.

The Wall Street Journal in an editorial on Sunday slammed the Biden administration for paying $1.2 billion per hostage and dismissed the claim by the administration that the funds will only be available for humanitarian needs. 

“Iran will use the cash the same way it did the money it received from the Barack Obama-John Kerry 2015 nuclear deal—to spread mayhem in the Middle East and beyond,” WSJ said. The newspaper also argued that “Money is fungible, as the White House knows, and its ‘humanitarian purposes’ line is best understood as political cover to justify the money-for-hostages deal. In a competition for the funds between the Islamic Revolutionary Guard Corps and the public health of the Iranian people, who do you think wins?”

The argument that money is fungible is even more applicable to Iran, which has an opaque political system not accountable to the people. Most companies that would be involved in the ‘humanitarian’ imports with the released funds are controlled by regime insiders and the Revolutionary Guard.

The WSJ also predicted that the deal is not limited to releasing the American hostages and could be prelude to an informal agreement to ease sanctions in return for an Iranian promise not to escalate its nuclear program.

“This new informal nuclear deal sounds like a less enforceable version of the 2015 pact. Call it money and sanctions relief for promises, and don’t expect Congress to have any say in approving it,” the editorial stated.

According to Rouydad24, Iranian officials have started to think of Russia as a $100 billion market for Iranian goods. This, however, is an outlandish expectation given Iran’s own isolation due to sanctions, its crippled economy, and the need for technology and raw materials hard for Iran to acquire.

The volume of trade between Moscow and Tehran reached $4 billion between January and October 2022, a far cry from the $100 billion figure. Russian officials have said that the volume of trade will reach $7.5 billion by 2025.

However, the main area of cooperation between Moscow and Tehran is political and military. The two have been allies in the Syrian civil war and their military ties have been expanding since Russia’s invasion of Ukraine. Iran supplied hundreds of kamikaze drones to Russia that have been extensively used against Ukrainian civilian and infrastructure targets.

Western countries have imposed new sanctions on Iranian individuals and entities for aiding Russia in the war, but a recent move by the United States to release billions of dollars in frozen Iranian funds in exchange for 5 American hostages means Tehran will remain undeterred to expand military ties with Moscow.

Rouydad24 quoted Iranian exporter Ali Hosseinian as saying that the figure will be initially increased to $8 billion, but the final target for trade between Iran and Russia is $40 billion per year.

In the meantime, Russia's export to Iran has grown by 27 percent while Iran's export to Russia also grew by 10 percent in 2022. Iran and the Eurasia Economic Union consisting of Russia, Kazakhstan, Belorussia, Armenia and Kirgizstan signed an agreement in early 2023 to boost exchange of goods, services and labor. Meanwhile, Iran and Russia agreed to cooperate in the areas of technology and logistics, while also signing several other agreements for cooperation in the areas of aircraft manufacturing, oil and gas pipelines and natural gas field development.

Iran is Rusia's second biggest trade partner among the Caspian Sea littoral countries, Rouiydad24 wrote, adding that some 90 percent of Russia's export to Iran are food and agricultural products. At the same time, some 60 percent of Iran's exports to Russia also consist of agricultural products. The rest of its exports to Russia include minerals, construction material, and plastics.

Meanwhile, Iran has called for a boost in Russia's exports to Iran particularly for wheat, grains, maze and cooking oil ingredients. According to the Rouydad24 Russia is capable of providing these items. Iran imports around $10 billion of wheat, maze, various edible oils and animal feed annually and potentially Russia can provide all these as a single-source exporter.

According to Reuters, one controversial item among Iran's imports from Russia is gasoline which Russia sells to Iran at a price $12 per ton higher than market prices.

Earlier this year Russia's VTB Bank opened a branch in Tehran and Iranian experts said that the branch will facilitate Iran's safe and low-cost access to the banking systems of Europe, Africa and Asia. It is not clear how this can be done while the Western and other international sanctions are in place against both Tehran and Moscow. International access for Russia’s own banking system has been severely restricted.