Iran says new sanctions will not hurt economy

"If we had any special difficulty in opening credit for merchants, the volume of investment in the country would not have increased compared with last year," Economy Minister Davoud Danesh-Jafari was quoted as saying by the ISNA news agency.

Economists say UN and US punitive measures imposed on the Islamic Republic since late 2006 are making Western companies more wary of investing in the country even though its vast energy reserves make it a magnet for oil majors.

The UN Security Council on Monday voted to introduce a third sanctions resolution against Iran over its refusal to halt nuclear work major powers fear is aimed at making bombs, but which Tehran says is designed to generate electricity.

Western analysts said though they might appear weak, the new steps sent a message to Tehran that even staunch trading partners like Russia and China opposed Tehran's determination to defy the Security Council.

Iranian officials have denounced the latest resolution, which includes an increase in the number of individuals and firms on a UN travel and asset-freeze blacklist, as illegal and made clear the country would not halt its nuclear work.

They also said the measures would not hurt the economy of the world's fourth largest crude producer, which is making windfall gains from the high oil price, and one official suggested Tehran was able to circumvent them.

Analysts and European executives in Iran say it has become increasingly difficult for Iranian firms, and Western companies dealing with them, to open letters of credit for imports into the country.

But Mohsen Talaie, deputy foreign minister in charge of economic affairs, was quoted as saying by the official IRNA news agency: "The sanctions will not have any impact on the country's economic development in view of the special mechanisms devised."

He did not elaborate, but Central Bank Governor Tahmasb Mazaheri last month said US allies such as Bahrain and the United Arab Emirates are helping shield Iran's banking system from Washington's "financial terrorism".

The United States has been trying to cut Iran's access to the global financial system, including by putting pressure on Gulf Arab governments to isolate Iran.

Western banks have stopped US dollar transactions with Iran or severed ties altogether.

Danesh-Jafari acknowledged some international banks may want to cut back on dealings with Iran but said others were interested in expanding ties with the Islamic state.

"Banks throughout the world are concerned about their own interests... and we see there are many banks interested in having relations with Iran," the minister said. (Reuters)