Iran sanctions 'lose-lose' situation

Iran's trade minister said on Monday sanctions were hitting the economy but warned Western countries threatening to tighten the measures that they were harming their own interests. In a change of tone from Tehran's usual line that sanctions have not damaged the economy, Minister of Industry, Mine and Commerce Mehdi Ghazanfari said the West was losing out too. "Sanctions are a lose-lose game in which both side make a loss. If they don't invest in our oil projects, they will lose an appealing market," Ghazanfari told a news conference. The U.K. on Monday also announced sanctions on Iranian financial institutions, joining the U.S. in putting further pressure on Tehran after recent disclosures about its alleged role in nuclear-weapons proliferation. The government imposed new financial sanctions on Iran, ordering all UK financial institutions to stop doing business with their Iranian counterparts and with the central bank of Iran, the Treasury said. It said the sanctions were in response to the International Atomic Energy Agency's (IAEA) latest report on Iran, which highlighted further concerns about the possible military dimensions of Iran's nuclear programme. Chancellor George Osborne said Iran's actions posed a serious threat to national security and the action was being taken in coordination with other countries. The move will prohibit UK credit and financial institutions from entering into transactions or business relationships with banks incorporated in Iran and their branches and subsidiaries. Firms with existing transactions and business relationships with Iranian banks will also have to stop doing business with them, unless they apply for a licence to continue, the Treasury (finance ministry) said. These licences cover humanitarian activities, personal remittances and provision of some insurance and reinsurance. The Treasury's decision builds on existing financial sanctions against Iran. The U.S. on Monday will name Iran, including its central bank, as a territory of "primary money laundering concern," according to people familiar with the matter. It will also place sanctions against "dozens" of Iranian companies and organisations that are allegedly involved in supporting Tehran's nuclear programmr, including its development of centrifuge machines and a plutonium-producing reactor in the city of Arak. Britain's sanctions are more aimed at cutting off funds from the program by sanctioning banks that it believes are helping in its financing. President Mahmoud Ahmadinejad has often said sanctions are having little effect on the economy and in some cases have made it stronger by making Iran find domestic solutions to economic challenges. Ghazanfari reiterated the stance that Iran had found alternatives to Western imports and investments, but did not deny the downside. "Facing hardship in a fight is inevitable. I admit projects will get harder as our trading costs will go up, delays will hit projects and money transfer will get harder," he said. "There is a difference between hardship and the impossible. (Sanctions) will never make the running of the country impossible. There are dozens of possible ways for us to connect to the world and we are not yet using all of them." The U.N. Security Council has imposed four rounds of sanctions on Iran since 2006 but Russia and China oppose any further ones, leaving the United States to issue unilateral measures and pressure its allies to follow suit. After the U.N.'s atomic agency said last week the Islamic state appeared to have worked on designing an atom bomb, Washington has lined up new sanctions on Iran's petrochemical industry, sources have told Reuters. Ghazanfari said several Western countries remained major trading partners for Iran, citing Germany, Switzerland, France, Italy among the top ten countries exporting to Iran.