Iran says new sanctions will not hurt economy

Manouchehr Mottaki, Minister of Foreign Affairs of Iran listens during a news conference at the United Nations European headquarters in Geneva March 5, 2008.

TEHRAN (Reuters) - Iran said on Wednesday new U.N. sanctions on Tehran over its disputed nuclear plans would cause no damage to the economy, saying its firms could still secure trade finance and investment was rising.

"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.

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

Economists say U.N. and separate U.S. punitive measures imposed on Iran since 2006 are making Western companies more wary of investing in the Islamic state even though it remains a magnet for oil majors because of its vast energy resources.

But Foreign Minister Manouchehr Mottaki said the new sanctions would not affect Iran's economy: "Within the last year we have signed and concluded economic contracts with so many companies from around the world," he told reporters in Geneva.

Asian and other firms have continued to sign energy deals with Iran, the world's fourth largest oil producer which also sits on the world's second biggest reserves of gas.

"SPECIAL MECHANISMS"

Western analysts said that though they might appear weak, the latest U.N. measures sent a message to Tehran that even large trading partners like Russia and China opposed Tehran's determination to defy the Security Council.

Iranian officials have denounced the new resolution, which includes an increase in the number of individuals and firms on a U.N. travel and asset-freeze blacklist, as illegal and made clear they would not freeze the nuclear programme.

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. Central Bank Governor Tahmasb Mazaheri last month said U.S. allies such as Bahrain and the United Arab Emirates are helping to 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 Tehran. Many Western banks have already stopped U.S. dollar and other transactions with Iran.

Danesh-Jafari acknowledged some international banks may want to reduce 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.

(Additional reporting by Laura MacInnis in Geneva; Editing by David Christian-Edwards)