Iran wants to trade oil with foreign companies to build housing

Iran is negotiating with Chinese and Turkish companies to build affordable public housing as part of a possible oil barter deal, an official said on Saturday.

Iranian President Ebrahim Raisi (Raeesi) has pledged to build one million apartments every year, during his four-year tenure, to address rising housing costs for ordinary Iranians struggling with high inflation and worsening of the economic crisis.

Ahmad Donyamali, a member of the National Housing Council, told the Iranian Labor News Agency (ILNA) that the government was in talks with a Chinese, Turkish and even European company to outsource part of the construction work and pay them in oil.

News about Chinese companies participating in the construction project emerged in October, but it was quickly denied at the time.

Tehran faces two obstacles in concluding contracts with foreign companies. The first hurdle is paying for goods and services under a US banking sanction that threatens foreign banks with third-party sanctions if they deal with Iran. The second problem is the lack of foreign currency.

U.S. oil sanctions have dramatically reduced Iran’s dollar earnings since 2018, forcing the country to dip into its foreign exchange reserves, which observers say have shrunk significantly in three years, though they may have fallen slightly. straighten out this year.

An oil barter deal could work especially for Chinese companies that already import Iranian oil under the radar of US sanctions.

However, the promise to build 4 million apartments in 4 years amid the economic crisis may be more of a wish than a reasonable project for Iran.

Nuclear talks with the United States that could help lift the sanctions are currently at a standstill and the outlook for the Iranian economy is bleak. The national currency, which has grown tenfold in four years, could drop to unprecedented levels if sanctions continue for another year.

The United States has threatened to toughen the enforcement of sanctions. Diplomats visited the United Arab Emirates this week to pursue the issue of compliance with US sanctions by actors in the region.

Donyamali, without naming any company, said the negotiations proved that foreign companies offered much better prices than their Iranian counterparts. A price of $ 100 per square meter ($ 9 per square foot) has been proposed for the construction of inexpensive prefab apartment buildings. That means more than a $ 24 billion investment for 4 million apartments, money Iran does not currently have. He stressed that Iran’s position is not to pay cash to foreign companies and to base the talks on the principle of oil barter.

Iranian companies are asking almost double what foreign companies are willing to accept, Donyamali said. Most Iranian companies in a project of this magnitude would be state or quasi-state entities, some possibly linked to the Islamic Revolutionary Guard Corps, the IRGC.

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