A Conversation with Valiollah Seif on the Future of the Iranian Economy

In conversation with Claudia Rossett, Foreign Affairs Columnist at Forbes.com, Valiollah Seif, Governor of the Central Bank of the Islamic Republic of Iran, discusses the current state of Iran’s economy and reviews the future challenges and opportunities Iran’s economy faces in its post-sanctions environment. Seif lays out the many ways Iran’s economy has progressed and stabilized in recent years, the obstacles facing their banking system, and the extensive and diversified opportunities that now exist since the JCPOA came into effect as well as the difficulties of its implementation. 

The C. Peter McColough Series on International Economics brings the world's foremost economic policymakers and scholars to address members on current topics in international economics and U.S. monetary policy. This meeting series is presented by the Maurice R. Greenberg Center for Geoeconomic Studies.

ROSETT: And now it’s my pleasure to make a brief introduction. You have the biography, but part of the international drama of Iran has turned on matters of money, finance, trade, and sanctions. And in this drama, one of the important actors has been Dr. Valiollah Seif. Born and educated in Iran, he has spent much of his career in banking, running at least half a dozen institutions including Bank Melli, Bank Mellat, and Future Bank in Bahrain. In 2013, he was appointed as governor of the Central Bank of the Islamic Republic of Iran and chairman of the Money and Credit Council. And without further delay, I’m pleased to introduce him. (Applause.)

SEIF: Good morning, ladies and gentlemen. I am delighted to be here today and have this discussion to the sidelines of the IMF-World Bank spring meetings.

Allow me first to thank the Council on Foreign Relation(s) for the excellent arrangement made for this meeting. I will briefly present an overview of recent economic and financial development in Iran, the progress made in strengthening the resilience of our economy, including the banking and also—and our expectation for better economic ties with our partners in light of the significant trade and investment opportunities our country offers. I will also highlight the challenges we face in this post-sanctions environment which we need to address to move forward.

As you know, following the intensified negotiations between Iran and the P5+1 that entered into effect in January 2016 of the so-called Joint Comprehensive Plan of Action—JCPOA—has opened a new era for the Iranian economy and its relations with the rest of the world. On our side, we were working not only to address the negative effects of the sanctions by making the economy more resilient, but also to ensure that it will be in a better position to respond to increased trade and investment once the sanctions are lifted.

Over the past two years, we have made significant progress in restoring macroeconomic stability, improving fiscal management, strengthening the banking system, stabilizing FX market, and advancing growth, enhancing structural reforms. We achieved all of this during a period when the unilateral sanctions continued. This also evidences the fact that, contrary to baseless allegation that some people made, sanctions did not and could not force to engage into a negotiation with our P5+1 colleague or compromise our legitimate rights to continue our peaceful nuclear activities.

As noted, the outcome of these efforts is very positive. Even though growth stagnated in 2015-16, reflecting the sharp decline in oil prices, and a wait-and-see attitude on the part of consumer and investors, it is expected to rebound to about 5 percent in 2016-17. Inflation has dropped to below 12 percent, and is projected to decline further to single digit by end 2017—2016-17. As the central bank tightened money to the policy and enhanced its capability—its credibility, the foreign-exchange market has stabilized, and the steps are being taken to unify the exchange rate once the normal account relations with foreign banks are adequately restored.

Let me now turn to the Iranian banking sector, which has a critical role to play, not only in the Iranian economy but also in facilitating a successful transition to a more dynamic engagement with the rest of the world. With a history of nine decades, and extensive correspondent and account relationship with many Asian and European banks in recent decades, and even with the U.S. banks prior to 1995, our banking system can draw on its rich experience and expertise.

This does not mean that our banking system does not face many challenges. It does, and we are addressing them. State-owned as well as private banks are being restructured and recapitalized to make them more robust financially. Shadow credit institutions are obliged to consolidate and apply for a banking license. NPLs are being monitored closely, and additional steps will be taken to repay and strengthen bank balance sheets. We are addressing these problems with assistance from the International Monetary Fund, and we are also strengthening the central bank’s supervisory powers, and extending them to all banking and credit institutions. Iranian banks overseas are subject to stringent supervision by home and host supervisors.

While reduction in international financial transactions between Iran and foreign banks has adversely impacted service delivery, the central bank is strengthening regulation and supervision to ensure proper risk-management practices in banks and compliance with international standards, including on corporate governance, anti-money laundering, and capital and liquidity requirements set by the Basel Committee. In addition, Iranian banks are increasingly preparing their financial statements in line with the international financial reporting standards—means IFRS.

We also attach high priority to enhancing the AML/CFT framework through improvement of KYC policies and procedures, to ensure prevention of financial crime and facilitate the reintegration of the Iranian banking system into the global economy. Following the passage of the AML law and its implementing regulations several years ago, the recent enactment of the CFT law will remove an important obstacle in the way of Iranian banks’ reengagement with their foreign counterparts. We remain committed to further strengthening the AML/CFT framework, and we have requested an IMF assessment against the FATF standards and intend to join the Eurasian AML/CFT Group.

I am sure many of you are aware of the Iranian economy’s potential, with a population of about 80 million, a young and well-educated workforce, and an entrepreneurial business class. The economy is also endowed with vast reserves of oil and gas, ranks 18^th globally in GDP in PPP terms. The $1.4 trillion Iranian economy is well-diversified and enjoys a broad domestic industrial base. As cited elsewhere, Iran has the consumer potential of Turkey, the oil reserves of Saudi Arabia, the natural gas reserves of Russia, and the mineral reserves of Australia.

Over the past 25 years, the country has completed five development plans and has attracted billions of dollars of investment from over 50 countries, primarily in the energy sector, petrochemical, mining, steel industry, telecommunication, car manufacturing, et cetera, and pharmaceuticals industry. Iran also has a large investment potential in information technology and aviation industry.

So far, I have talked about, in a very brief manner, the extensive opportunities that my country offers to potential investors in different business sectors of the country. Let me also give you a snapshot of what has happened since three months ago, the date of implementation of the JCPOA: almost nothing.

On the JCPOA, EU and the United States are committed to taking all administrative and regulatory measures necessary to ensure successful and effective lifting of sanctions to enable Iran to reintegrate into the international markets. We are not discounting what has happened—what has been done, such as OFAC’s guidelines documents, recent visits to other countries encouraging the financial community working with us, general and specific license issued to encourage engagement in trade and investment. However, these have proved to be insufficient after passage of three months. In general, we are not able to use our frozen funds abroad.

On this, serious efforts are made by our partners to make the JCPOA work. In my view, they have not honored their obligations. If, according to our partners, it is our conduct which prevents international banks engage into business with us, they were fully aboard of our conducts before signing the JCPOA. We have not changed them. They signed it just for—just for us to deliver our commitments and do nothing on the grounds that Iran is responsible for.

This is not correct. This is misstatement of facts. That done, they need to do whatever is needed to honor their commitments. If it means more face-to-face contacts with the international banks assuring them they do not penalize them working in Iran, if it means making changes to the laws and regulations to give access to the U.S. financial systems—allow U-turn, whatever is needed—they need to do. Otherwise, the JCPOA breaks up under its own terms.

Thank you very much. (Applause.)

Sorry for—thank you.

ROSETT: Thank you very much.

SEIF: Thank you very much.

ROSETT: Over there. We will have a seat here.

Thank you. We should also just note this meeting is part of the Peter McColough Series on International Economics.

Thank you kindly. I’m going to ask a few questions, and then we’ll open it up. And could I start by asking you just in brief, was it sanctions that brought Iran to the nuclear bargaining table?

(Note: For the remainder of the transcript, Mr. Seif’s remarks are through an interpreter.)

SEIF: It seems that we have a kind of misunderstanding here, and sometimes people have this misconception. Iran’s economic performance, especially over the past two years, clearly shows that Iran was never in a bad economic condition. And I think that these two are usually confused. One is related to mismanagement we have had in the past, and the other one is sanctions.

I don’t deny the fact that sanctions have had a cost for our economy. But the truth is, over the past two-and-a-half years since President Rouhani has taken office, the economic achievements we have had clearly show that we have never been in a very bad economic condition. Inflation was over 40 percent, but through good management of resources right now is less than 12 percent. And when our economy was going through a recession, right now we have 3 percent growth—it was for last year. And these are some of the examples that show that, due to our—we could have economic growth even during sanctions. So one of the—when you look at the stability in the market, especially in the foreign exchange market, this is something we enjoy. And we have a very positive record over the past two years. And we see that volatility has dropped dramatically and we have relative stability.

ROSETT: Thank you. And—pardon me, the echo effect. A question that I think would be of concern, especially for Americans looking at potential business in any way related to Iran, for a foreign investor in Iran today, to what extent would they be supporting or working with or enriching the IRGC, the Islamic Revolutionary Guard Corps, if they start to do business with you? Is it actually possible to disentangle this from the general economy?

SEIF: It seems that here we have had some exaggerations. Iran’s economy is very transparent. And the financial data is readily accessible. And you can easily have access. I mean, you can go through KYC, know your customer, and there are some services you can use, and any foreign investor can benefit from those services for identification of the customers. So what you said is that foreign investment should have the discretion and also the ability to know who he is dealing with.

And this is something completely possible. You can buy the services available inside a country. There are different firms. There are credible firms. And they are providing know your customer services. Even for Iran, when we are trying to invest in a foreign country, we—it could be a European country or a neighbor—we usually have know your customer, and we try to use the local services available in that country. So these companies and firms, they are providing for that knowledge gap you have so you can make proper decisions.

ROSETT: And should the IRGC have access to U.S. dollars in the current discussion is—that’s all right. The question is, do you think that the IRGC and its businesses should have access to U.S. dollars? The Islamic Revolutionary Guard Corps, do you think they should have access to U.S. dollars? In other words, if Iran gains access to U.S. dollars, U-turn transactions and so on, should the IRGC be entitled to be part of that?

SEIF: What is—you see, the services that are provided in the society can be used by anyway. And of course, you can get information—you see what we are talking about would be about the banks that would be helping us in converting different currencies and to provide access to financial services of the U.S., so that you convert to one foreign currency into another, and settle a transaction. And these banks, they are obligated to provide the services they have for their foreign partner, and to provide the assurance that—because, remember, we are talking about know your customer here. And you know that you also should know the customer of your customers so that you can have complete coverage for the bank that is providing the service.

ROSETT: Now that Iran and the P5+1 have agreed that Iran will have a peaceful nuclear program, could you tell us, in the question of how Iran uses the resources that it has available, which we’re talking about, what is the cost to Iran of the nuclear program, of the missile program, of the military generally? If you could just break that out. How much is Iran spending per year, however you might sum it up?

SEIF: Well, how much we are spending on diverse type of activities is something that I cannot provide you with any figure. But you know, every country makes a number of decisions based on its priorities, and will invest accordingly. And these are, in fact, permissible activities. And when it comes to peaceful nuclear activities, we have the right—and also, this is the need of every country, to provide a better future for itself and to fully benefit from its potential resources and the talents it has domestically. Fortunately, after many years, we could prove that Iran has never tried to leave the peaceful nature of its nuclear program, and all the activities have focused on those areas that are, let’s say, peaceful and humanitarian.

So when it comes to the missile activities, Iran, remember, is located in a very high-risk part of the world. And you know, Iran’s neighbors are not safe. We have the growth of ISIS. And those countries that have promoted ISIS and its growth and to commit its atrocities—and I’m sure that you’re fully aware of what ISIS is doing to innocent civilians, to women, to children. These are the things you see. Who is responsible for that? And the question is, how can Iran should get a guarantee that it will not be the next target. And if Iran is a target of an invasion, who is going to protect Iran? Who’s protecting Yemen at the moment?

The point here is based on experience, based on our history, Iran has come to the conclusion that we should rely on our own capabilities, those capabilities that can be used for defensive purposes, defense against any kind of invasion. So I think that these are some natural developments Iran is pursuing. But they have political interpretations, and negative interpretations outside Iran.

ROSETT: May I press you, as someone involved in finance and money, simply to can you give us a figure for how much Iran has invested in its nuclear program? What has it cost?

SEIF: Well, this question is something I don’t have the response to, but definitely we have done some investments. And of course the—it has been worth the effort, any kind of investment done. First, you go through feasibility studies and economic benefits of that investment, and whether it is compatible with the costs or not. And Iran wanted to move in the right direction. But nobody cooperated with Iran. And Iran had to rely on its own domestic resources. And that’s why we went through the course we went through. But unfortunately, it was surrounded by misunderstandings. And those people who have had those misrepresentations of Iran’s nuclear activities were themselves aware of the peaceful nature of Iran’s nuclear activities. But due to their political approach, they wanted to create problems for Iran.

ROSETT: During the period of intensive sanctions, it was clear that some countries were helping Iran carry on. Was China the most helpful, or were there other countries that were important players, such as Russia?

SEIF: Well, I think that you want to know which countries have had the biggest help provided? Well, Iran has had a lot of economic ties with other countries. And there were countries that had positive economic relations with Iran. They continued to work with Iran. China was one of them. Russia was one of them. Some other countries also worked with Iran. It doesn’t change anything, you know. Iran under any circumstance, due to its economic potentials, has the ability to run its economy without needing anyone, and not to become dependent and sacrifice its values.

ROSETT: I have two more questions I want to try and get in before I open it up to our members. So I’ll just start. First is, this must be of concern to you. Iran, on the Transparency International Corruption Perceptions Index ranks 130 out of 167 countries. It’s worse than Russia or Pakistan. Just in brief, why is corruption such a problem? And what are the chief obstacles for you in trying to deal with it, to get rid of it?

SEIF: I can give you the assurance that this ranking itself is politically motivated. And Iran’s domestic conditions—if you come and live in Iran and see what kind of relations we have, you will realize that many countries that have a higher ranking than Iran, or they have a better standing, they are in a worse condition. But due to the political nature of this approach, Iran is ranked as what it is. Over the past two years, we have had—based on the reports we have provided we have made some improvements. And I would like to ask you to pay attention to the fact that Iran is being treated politically. And sometimes you see that it will have negative consequences. This is something we need to avoid. There are certain organizations that should work based on facts and justice. And when you see that they have a biased perspective, then you cannot trust their findings.

ROSETT: Thank you. And then finally, this is a question about North Korea. Will sanctions stop North—you have a lot of experience with how sanctions actually work in practice. Will sanctions stop North Korea’s nuclear program?

SEIF: Well, regarding Iran, I told you that it didn’t have any impact on our viewpoints. And I told you that sanctions were costly for our people. They increased the cost of transaction in our country—10 to 15 percent increased cost of transaction. This is based on general research we conducted. And you know that this itself can lead to corruption. And when you don’t have a transparent banking system, and it cannot provide the services needed for legitimate business practices, then transactions will be diverted to a nontransparent channel, through exchange bureaus or some people who have some expertise in this kind of nontransparent types of transactions.

So sanctions, I think, will never work. And I think that this is something which doesn’t belong to the modern times. The world economy is changing. I don’t know about North Korea. I don’t know what’s happening to it. But I think that if North Korea is acting the way we were acting, or we have been acting, I’m sure that they can survive and I’m sure that they can run their economy and they wouldn’t be—I mean, sanctions will not a determining effect. Sanctions only put pressure on people. It doesn’t change the course of policies. But it only will impose certain costs and create a context for non-transparency and corruption.

ROSETT: Thank you, Governor.

OK. I’d like to open this up to questions from the audience. A reminder, this meeting is on the record. Please wait for the microphone, speak directly into it. Let me start right here.

Q: Thank you, Governor. I’m Hani Findakly with the Clinton Group.

You’ve spoken about the diversity and richness of the Iranian economy, and mentioned as an example the business in oil and natural gas, you know, comparing them to Saudi Arabia and Russia, both of which are suffering, struggling quite a bit because of the collapse of oil and gas prices, as well as minerals. So with this—with this situation at hand, and the prospects for continued depressed energy prices, where do you see the future of the Iranian economy, and what kind of vision do you have in an environment that’s changing quite a bit, and especially with Iran consuming almost half of its oil production locally?

SEIF: It was a very good example you provided, taking into account the vast oil and gas resources we have, and also the dependence we had on oil revenues. If you compare what we did when we were confronted with the shock in oil prices, and compare Iran to other countries—you see, we were the least-effected country. It didn’t change our inflation. And this is exactly when we decreased inflation from 40 percent to 12 percent. So it didn’t do anything to our inflation, it didn’t have an impact on our exchange rates. And we had our economic stability. We pushed forward with our economic plans.

Compare us with other oil-rich countries. You see, our economy is stable. If in the past we had some economic mismanagement, it should not be confused with the effects of sanctions, and taking into account the policies we have had with respect to resilient economy, and also the measures we have taken in this regard. So this resiliency is something which is becoming part of our economy. And our country is very robust as a result of the policies we have implemented, and also the diversity of our economy.

So you see that we are running the economy, and the objectives we have—we have had five development plans. The sixth one is being ratified by the Iranian parliament. So the objectives we have, the long-term objectives, the outlook we have for the next 20 years, and I think that we will be number-one economy, and with a robust economy, in the region.

ROSETT: Go to the very back.

Q: Thank you very much, Governor.

I’d like to follow up on this question. You’ve answered a big part of it, but let’s put some numbers on it. Looking forward, if oil stays at $40 a barrel, you have a program. What specifically might we see differently if oil went up to, say, $50 or $55 a barrel by the end of the year? Would that—would we see any specific differences in Iranian economic programs and investments? Thank you.

SEIF: Thank you. Definitely an increasing oil prices based on the policies we have, and also plans we have, will expedite Iran’s economic development, job creation, and also promotion of exports. And of course, we have learned our lessons. And the excess income will not be spent on import of consumer products and destruction of the economy. This is the main direction we have taken, and definitely in the course of the implementation we are highly determined.

ROSETT: Yeah.

Q: Thank you. Robin Wright, with the U.S. Institute of Peace. Getting some major feedback here.

ROSETT: Tell you what, walk over there. Let’s see if that works.

SEIF: Maybe you have mobile. (Laughs.)

Q: Let me ask you about your meeting yesterday with Secretary of State (sic; Treasury) Jack Lew. This is the first time you’ve had a bilateral meeting with him. Could you tell us about the nature of the conversation and if you made any progress on your points, if you had any U.S. response? And secondly, looking at the bigger picture, this is the third channel the United States has developed after the diplomatic channel, after the channel with Brett McGurk with the intelligence officers on the prisoner swap, and now a channel through—with the Treasury. What does this reflect about the developing dialogue between Tehran and Washington?

SEIF: With respect to what I’ve said, you definitely know what I’ve been talking about. And we don’t talk about something specific here unless we are talking about adherence to the nuclear agreement, and also a commitment to what we are obliged to implement. So it was our expectation that after the implementation of JCPOA we could see Iran getting reconnected into the international economy. Unfortunately, the context doesn’t show that. And we are asking our partners in the discussions and negotiations agreement to abide by their commitments so that we have tangible results to present to our people.

(Technical difficulties; English audio gap.)

SEIF: I don’t call it a third channel. There was a need for a specific meeting related to banking issues, and also the expectations we had regarding what each one is supposed to do based on JCPOA. And we wanted to speed implementation of what was promised. And I hope that these discussions would lead to the result we have been expecting.

ROSETT: Anyone on this side of the room? (Laughter.) Thank you.

Q: Thank you. Mohammed Khaishgi from The Resource Group.

My question related to the sanctions, and the continuing—the fact that several of the sanctions require congressional approval of the U.S., and the reality of the U.S. political system. What do you think is the outlook for the financial sort of aspects of the nuclear accord, given those political realities, and the fact that there’s likely to be some form of check on, I guess, Iran’s ability to integrate the international financial system going forward, and how you’re going to navigate through that? Thank you.

SEIF: I don’t have any specific thoughts on that. I think that the current U.S. administration has accepted this commitment. And Iran is relying on this commitment. And we expect that not only the U.S., but also our European counterparts will abide by their commitments at any time. Otherwise, you can’t talk about international relations. That would—I mean, this is a kind of accepted principle in international relations. So based on the expectations we have, the commitments are accepted and we expect those commitments to be fully respected. Otherwise, that would be against the concept of being committed.

ROSETT: Oh, sorry.

Q: Oh, sorry.

ROSETT: It’s all right. Go ahead. We’ll get to you, yeah.

Q: Just a quick question to follow-up on one of the questions here. You said several times—Margaret Warner, from PBS.

You have said several times that Iran is not getting reconnected with the global economy, that the West isn’t living up to its commitments. Can you be more specific? Do you think that the U.S. administration is deliberately trying to frustrate Iran’s efforts to reintegrate? Or is because Iran’s financial system is so out of step with the global standards that it’s just very difficult for you to reintegrate, as you’d like?

SEIF: What is important is the result of the nuclear agreement, or JCPOA. If you look at the results, you can see whether you have made any progress or not. What we see is that the impact we were expecting to get is not what we see, at least on a tangible basis. And for having normal banking relations, we do not still have a normal condition. We are still in an abnormal condition. I don’t want to say that no improvement has been made. But I said in the opening remark that taking into account the scope of the activities we were supposed to engage in, and also the expectations we had, nothing has happened. And we hope that our—the other side of the agreement will abide by its responsibilities.

You see, from the Iranian side, we have fully implemented what we were supposed to do—I mean, completely. And there is not even one single case that you say that we did not go through. But the other part, has not acted on its commitments. So that’s what we’re expecting, a speedy implementation of those expectations.

ROSETT: I’m going to go to you and finish off that row. Thank you.

Q: Thank you. Barbara Slavin, from the Atlantic Council and Al-Monitor. Governor, good to see you again.

What is the answer you get from major European banks when you ask to restore correspondent relations with them? Why are they so hesitant? Do they tell you that they’re afraid of new sanctions coming down, uncertainty about the American political system? And how long do you think it’ll take before Iranians will be able to actually do banking with top-tier banks in Europe? Thank you.

SEIF: I think we must make a distinction here. Remember, Iranian banks, whether they have accepted international standards or not, whether they are up to the standards or not, this is one issue. And the second question is why big European banks or medium-sized European banks, they are hesitating. Now, in the FATF list we have two countries. One is Iran. The other one is North Korea. These are—in fact, these two countries are in fact collaborating. Do you really think that Iran’s economy is similar to that of the North Korea? And many other countries—many—are not in that list. Do you think that their condition is better than Iranian banks?

We all know that this is not the case. And this is the political behavior Iran is receiving. And you see it here also. So one of the reasons that we don’t see a speedy expansion of ties between Iran and international banks is FATF, which is wrong, in the list. You know, last week my colleagues from the Central Bank and the Ministry of Finance, they had a presentation in FATF meeting in Paris. And the participants were surprised. They couldn’t imagine that we have taken so many measures.

And when it comes, for example, to anti-money laundering law was passed many years ago in our parliament. And before the nuclear agreement, we had made proposals for combatting the financing of terrorism. It was presented to the parliament and last month it was ratified by the parliament. And now our banks are supposed to comply with these standards. But in an ideal world—well, it’s not yet 100 percent compatible with international standards. But this is something natural. And of course, many of—and this is the case for many countries across the globe. So I think this approach is wrong.

The second issue is why European banks are hesitating or maybe they don’t have the courage to—maybe I should use the word—they don’t have the courage to work with Iranian banks, it’s because of the heavy penalties that they have been going through or impose upon them. And also, they have been asked not to work with Iranian banks. And they are afraid. This is quite natural. If these threats are removed, that small weakness related to lack of full compatibility with FATF standards would be immediately—I mean, would be bridged in a very short time, and Iranian banks can reestablish their connections with international banks.

And the biggest European banks have had a very good relationship with working with Iranian banks. I mean, there’s a kind of positive history we have. And that memory is still attractive to them. But this is ignored at the moment. And we want both sides of this agreement, especially the U.S., to take the required measures to remove the obstacles.

Q: It was interesting to hear you catalogue how much the Obama administration—

ROSETT: Would you state your name and affiliation?

Q: Reagan Thompson. I’m from the Hill.

And it’s interesting to hear your catalogue how much the Obama administration is doing to try and encourage foreign investment in Iran. You mentioned OFAC guidelines, licenses, visits. And you also talked about how businesses can access the very open financial data from Iran and can also know their customer. And as a result, they know of the IRGC’s vast influence in the Iranian economy. So my question is, you didn’t talk about what Iran is doing. There’s always two parties involved in financial transactions. What is Iran doing in terms of addressing issues that many businesses are worried about, such as ballistic missile launches, the fact that Iran remains a jurisdiction of money laundering, and the fact that it’s the world’s largest state sponsor of terror? So specific policies and then results of that that your government is doing.

SEIF: Well, I think that I have talked about that before, and I think it’s very clear. I mean, when you talk about Iran’s missile activities we only are benefitting from our previous experience, and we want to protect our own citizens, and to reduce the threat of any aggression. This is a fact you need to recognize.

And it seems that you have—you are fully informed of ISIS activities in the region and also the types of crimes being committed by that terrorist organization. Iran has this experience, and also we have an experience of being the object of an aggression, and no one came to our help. And the first reaction was—we expected the international community to respond, but no one responded when we were invaded by Iraq. So Iran has to depend on its own internal capabilities, and not to provide any opportunity for any aggression against our country. So this is something normal.

But I want to ask you this question. Over the course of the past few years, do you have any history of Iran’s aggression against any of its neighbors? Why in an artificial way people are promoting Iran-phobia? What Iran has done which is strange that has become the object of so much media pressure? Iran’s actions clearly indicates that we are following on our own—following our principles, and we don’t allow for any aggressor to commit any aggression. And we are using all of the resources we have to stop that, and we had eight years of an imposed war that we managed. And remember, we did not receive any foreign assistance while our counterpart—I mean, the aggressor—was supported by every country. And see what has happened now. So this is experience we have had, and so that’s why we boosted our defense capabilities, and we are following down this path very carefully. And we always say that we don’t have any other intentions, save peaceful intentions. That’s it.

ROSETT: Would anyone like to ask a question that answers his question? OK. Yeah, in the way back, thank you.

Q: Hi. My name is Valentina Pasquali. I am a reporter with ACAMS MoneyLaundering.com.

You’ve mentioned the SFT law that was recently passed. I was wondering if you’d give us a little bit more details in terms of what it contains, and also tell us a bit more about other efforts that are undergoing in Iran on the path to joining the Eurasian Group, which you’ve mentioned at the beginning. Thank you.

SEIF: Over the past two-and-a-half years, we have taken a number of measures to promote our banking sector standards. And most of them focus on more transparency, increased transparency.

One of the measures we have taken is obligating banks when it come to the minimum disclosure requirements for our banks’ financial statements and balance sheets. So our banks need to disclose certain items that are needed to be disclosed, and they can help in the KYC process.

And as I pointed out, we have the anti-money-laundering law being used in our banks, and our banks need to comply with that. The CFT was ratified last month, as I pointed out, and this will be a preventive measure that will fight financing of terrorism. And this is very crucial for a country because you know that our country is, in fact, surrounded by different terrorist activities. And based on our own priorities and to protect our own safety, we needed to fight this, and we are compatible with the international standards.

And when we explained what we have done to FATF in Paris, as I said, the participants were surprised when they learned about the progress and achievements we have had. And after this presentation and the presentation we had, we are sure that the process for Iran to be taken out of that list would be facilitated. And I hope that those political considerations I said will not act as a hindrance here.

ROSETT: I think we have time for about two more questions. I want to give this side of the room and—

Q: Thank you. Speaking for this side of the room, I’m John Sullivan from George Mason.

One of the things that we see quite a bit in the media coverage of Iran, reporting coming out of presentations and speeches being made, is the rather substantial reference to the resistance economy—the idea of resisting engagement with the international economy. How do you reconcile that, plus the role played by the IGRC, with the idea of creating an open-market, integrated economy to the rest of the world? It does seem to be a contradiction. So explain it to us.

SEIF: I think that there is a kind of serious misunderstanding here, or maybe—let me explain this. When we talk about resilient economy, it goes to creating a sense of stability in the economy and providing the context for dynamic growth, and also avoiding any possible shock that might undermine the economy or present volatility in the economy that would have an impact on the living standards of people. So that’s our definition of resilient economy. So we rely on our domestic resources to create jobs for productive purposes, for promotion of exports, and in no way—no one has this interpretation that it is related to IRGC’s activities or other types of activities.

So the kind of plans or the plans we have for different obligations and responsibilities of different parts of the government, we are following on this agenda, and we are creating an economic condition where our economy would be safe from different shocks and will—we would not—we will be able to reach the objectives we have set for ourselves. As I said, you can compare the effect of the oil-price shock on our economy and with that effect on other oil-exporting countries’ economies, and you see that our economy is resilient here when it comes to such shocks.

And, you know, that drop in the price of oil was a political measure. Our enemies, based on their political approach, might try to target our weaknesses. And they thought that this is one of our weaknesses, so if they drop the price of oil then our economy will collapse, and then we will not be able to manage our economy. But you see what happened is that this economy is perfectly stable and has been managed properly, and the economic objectives we have set for ourselves, we could reach them. So we had decreasing pattern of inflation drop, and our economic growth is continuing. I said that any increase in oil prices will expedite our development and progress, but it cannot reverse it. That’s a fact.

ROSETT: OK, last question. The gentleman there. Oh, right there on this side. Yeah. Thank you.

Q: Maz Yeremi (ph) with Goldman Sachs.

(Continues through interpreter.) Well, if you think that Republicans win in presidential elections and the new administration tears the agreement into pieces, based on your agreement with European and Japan, which of these countries do you think that will restore the sanctions? Or do they continue with normal economic relations?

SEIF: So what is now evident is that, in international contexts, we have demonstrated that we abide by our commitments. And our economic and business partners have acknowledged the fact that working with Iran has never been a risk. But whether another country interferes in this and distorts the natural course of events, that would be in contradiction to international regulations and laws.

The U.S. administration has certain obligations vis-à-vis Iran, and we expect the U.S. to respect these responsibilities and commitments. Whether a third country will—what will do as a result of American interference is something that you should ask that country. And we expect our business partners to abide by the contents of the agreements we signed, and to avoid any measure that will result in a sense of mistrust in international contexts.

ROSETT: And, with that, thank you very much for your questions. Thank you, Governor Seif, for coming to speak with us. And we conclude this meeting. Thank you. (Applause.)

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