Iran's oil minister said today that the country has cut oil exports because economic sanctions have made it impossible to use the money those exports would bring in.
"At the moment, we are facing sanctions. So what is the use of producing more oil when we have no use for more money? We don't want to leave it in the bank," Oil Minister Ali Akbar Moinfar said at a press conference after his return from OPEC's meeting in Algiers.
"We'll try to produce as much as is needed to import the goods we need," he continued.
It has been well known in petroleum circles here and in other parts of the world that Iran's production has been cut sharply in recent months.
But most experts blame labor unrest, including sabotage of pipelines in the southern province of Khuzestan, for the lowered production, along with a refusal of some of Iran's traditional customers, especially Japan, to pay the high price Iran is demanding.
Moinfar's statement, however, was the most graphic illustration yet provided by a high Iranian official of the adverse effects here of the economic boycott organized by the United States in an effort to force Iran to release 53 Americans who have been held hostage since the U.S. Embassy here was seized Nov. 4 by Islamic militants.
Other indications that Iran is suffering from the boycott have come from Commerce Minister Reza Sadr, who said during a trade mission to India this week that the embargo on sales to Iran makes it difficult for this country to buy needed spare parts for such high-technology items as computers, complex machines for the oil refineries, and planes and helicopters. c
Yet there are strong elements among Iran's dominant fundamentalist Islamic clergy who welcome a return to the simpler economic life and an end to dependence on Western technology. This trend is being accelerated by the various economic sanctions imposed by the United States, Western European nations and Japan.
Moinfar said the cut in oil exports -- which he declared now stand at 800,000 barrels a day, compared to 4.7 million barrels a day in 1975, when the deposed shah was still in power -- is good for the country since it preserves a natural resource for future generations.
"If there were no sanctions," Moinfar maintained, "we could go back to 3 million barrels a day production." He said new trade agreements -- presumably with Romania, Turkey and possibly India -- mean that Iran will soon begin increasing oil exports to 1 million barrels a day. This would raise its daily oil revenues from about $24 million to $30 million.
Yet in February, Iran earned $52 million a day from oil exports. By March, before the economic sanctions had taken full effect, income from oil exports had dropped by $10 million a day -- to $42 million. This sharp drop played havoc with Iran's fragile economy, which is heavily dependent on oil income.
Moinfar acknowledged today that Iran's Revolutionary Council has passed an "emergency budget" based on $10 billion in oil income this year instead of the $23 billion originally projected in a budget released last month.
Adding to the budget woes, Moinfar said, a secondary source of government income, customs duties, also has dropped because economic sanctions have reduced the flow of goods into the country.
Diplomats here believe that Iran will have to make drastic changes in the organization of its government, which spends 90 percent of its budget on salaries, in order to get along on just $10 billion in oil income.
One analyst said the only way the government can do that is to cut employes' salaries. This could be politically dangerous in a time of rampaging inflation and high unemployment.
No details have been released on the emergency budget, but hints in newspapers of salary cuts for government employes have drawn protest meetings in various ministries.
While Moinfar blamed the economic sanctions for the drop in oil exports, petroleum experts here said a surplus in the oil market -- along with a refusal by one of Iran's biggest customers, Japan, to pay the high price of $35 a barrel -- played a major role in Iran's current economic woes.
Japan had been buying 530,000 barrels of oil a day.
"We're not ever going to sell that much oil to Japan even if the sanctions are removed. But Japan will lose forever more for playing politics with our oil," Moinfar said.
He made it clear that Iran is trying to diversify the customers for its oil -- which used to go mainly to Western Europe, Israel, Japan and the United States -- by signing new trade agreements with Romania, Turkey and possibly India.
Iran is negotiating a partial barter arrangement with Turkey this week to exchange food for oil. On Sunday Iran signed with Romania the most extensive trade pact since the U.S.-led economic sanctions began in January. e
Other communist countries are also increasing their purchases of Iranian oil -- up to an estimated 200,000 barrels a day.
Moinfar, in his press conference, attacked Saudi Arabia and Iraq for their "unprincipled" high production.He said the high Saudi production and the income it brings are causing domestic unrest there.
He predicted Saudi authorities will be forced to reduce oil production by a million barrels a day.
In another development here today, Tehran radio reported that 11 Army officers have been arrested for being part of "a counterrevolutionary network" that cooperated with a Kurdish party that wants greater autonomy for the province of Kurdistan. The Army officers were also accused of wanting to return the shah to power here.