SWIFT - the effect on the Iranian economy

Why would we want to take the word of an Israeli foreign minister?!
Blocking SWIFT transfers crippling Iran's economy

Israeli Finance Minister Yuval Steinitz said Sunday that blocking Iran's access to the international bank transfer system SWIFT could potentially force the collapse of the Iranian economy.

China Daily,

19 March, 2012

"A modern economy cannot function without international clearance, as well as an increasingly tight financial siege," Steinitz said in an interview with the Army radio, adding that the move would "make importing and exporting very difficult" for Iranian banking institutions to transfer oil revenues from abroad.

In a move to support the European Union's tightening of economic sanctions on Teheran, the Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT) on Saturday barred 30 Iranian financial institutions from using its services, which were considered a mainstay of the international commerce.

SWIFT CEO Lazaro Campos said the step was a "direct result of international and multilateral action to intensify financial sanctions against Iran."

Steinitz called the move "dramatic" and said that his ministry "will continue to promote worldwide economic sanctions and measures to hinder the commercial and financial activities of Iran."

While Steinitz said he was not sure if the SWIFT cutoff would succeed in compelling Iran to abandon its controversial nuclear program, Israeli Deputy Prime Minister and Minister of Regional Development Silvan Shalom was more optimistic.

"Iran is progressing with its nuclear weapons program in order to safeguard the regime's rule. But the moment that the sanctions become this severe, first with oil and now with (money) transfers, perhaps we will get to a point where they will understand that only abandoning the program will allow the regime to survive," Shalom said.

"We already don't do transfers using documents. Everything is done by international (electronic) transfers. What will they do now? Carry around suitcases with gold?" Shalom said.

Iran has repeatedly denied Israeli and Western charges that its nuclear program has military purposes, saying that its nuclear enrichment activities are meant for power generation and manufacturing medical isotopes.

"I think the United States intelligence services and the West know that we are not after building nuclear weapons," Mohammad Javad Larijani, secretary general of Iran's High Council on Human Rights, said last week in reaction to the ban on fund transfers.

Israel's Netanyahu pestered SWIFT to stop services to Iran: Israel official

An Israeli official says the Society for Worldwide Interbank Financial Telecommunication (SWIFT) discontinued offering services to Iran upon the persisting demands by Israeli Prime Minister Benjamin Netanyahu.

Press TV,

19 March, 2012

On March 15, SWIFT CEO Lazaro Campos said in a statement that the society has decided to discontinue offering services to Iranian banks which are subject to financial sanctions imposed by the European Union. 

This is while the Israeli official, whose name was not announced, indicated that, in meetings with US president Barack Obama and Canadian Prime Minister Stephen Harper, Netanyahu had demanded Iran’s expulsion from the SWIFT, the Ha’aretz reported. 

According to the unnamed Israeli official, Netanyahu told Obama that "we need SWIFT swiftly.” 

Following the SWIFT's announcement on Thursday, Netanyahu’s office “congratulated SWIFT for its decision” in a statement issued later on the same day. 

Israeli Finance Minister Yuval Steinitz also applauded the move, claiming that the decision will harm the Iranian economy. 

Established in 1973, the SWIFT is an international clearing system which handles cross-border payments for more than 10,000 financial institutions and corporations in 210 countries. 

Iran Increased Oil Exports in January: Industry Report

CNBC,

19 March, 2012

New information suggests that Iran’s oil production may not have fallen as much as other industry reports have speculated. The latest publication of data by the Joint Organizations Data Initiative (JODI) published on Sunday showed Iran produced 3.72 million barrels per day in January, marking the highest output since December 2008.

The bulk of the increase went into exports, up 245,000 barrels per day (bpd) or 12 percent, when compared to the last available numbers recorded in November.

JODI, an initiative coordinated by the International Energy Forum (IEF), depends on participating member states for data collection. Iran has yet to submit data for the month of December with the previous production listing at 3.590 million barrels per day.

The IEA said in its report on March 14 that sanctions of Iran’s central bank were having “a pronounced impact on Iranian crude trade patterns” and estimated that exports “could be curtailed by around 800,000 bpd to 1 million bpd from mid-year onwards”. Total production was placed at 3.43 million bpd in January, with a further decrease to 3.38 million bpd in February.

Saudi Arabia, the world’s largest exporter, reported a minor increase for JODI of 61,000 bpd in January versus a month earlier to reach 9.871 million bpd, closely in line with the IEA assessment. Exports in particular saw a larger jump, up 143,000 bpd.

Other notable changes include Russia, which saw its production drop below 10 million bpd to 9.871 million bpd, with no details available on how exports faired.

Kuwait, Libya and the United Arab Emirates, all notable players in the world oil markets, did not provide any information in time for the latest update.

The IEF met last week at a summit in Kuwait, where one of the main points of discussion among energy ministers was addressing inconsistencies and delays in data submissions from member states. More transparency, the IEF argues, would help mitigate excessive price volatility largely detrimental to long-term industry investment. The meeting, which was largely held behind closed doors, brought together producers and consumers representing some 90 percent of global supply and demand.