President Mahmoud Ahmadinejad of Iran has offered a US$300 million letter of credit (L/C) to Lebanon to help it boost its economy.

The L/C is meant to help Lebanon boost its economy, but it is conditional on Lebanon risking a breach of UN sanctions.

Controversial visit

News of the L/C emerged after the Iranian president's visit to Lebanon earlier this month.

During the visit - deemed by US President Barack Obama as provocative - Iran and Lebanon signed a raft of energy, oil exploration and economic agreements.

Power projects

One agreement included a US$300 million Iranian L/C to enable Lebanon to embark on new projects.

One possibility is that the L/C could be used to finance new power stations or a direct electricity link between the two countries via Turkey.

Conditionality

But the L/C is conditional. The Iranians are reportedly demanding a matching guarantee of US$300 million from the Lebanese Central Bank.

According to analysts, Lebanon cannot do this without breaching UN sanctions against Iran.

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