To add details

By Andrew Mills, Maha Al-Dahan and Parisa Hafezi

DUBAI, June 16 (Reuters) - A source familiar with the matter told Reuters about a $300 billion special fund aimed at stimulating investment in Iran, noting that more than half of this amount has already been allocated.

The source, who asked not to be identified because the plan has not yet been announced, explained that the fund aims to give both parties an economic incentive to reach a final agreement after reaching a temporary agreement scheduled to be signed in Geneva next Friday .

US and Iranian officials announced on Sunday that they had agreed on a framework to end the war, lift the US embargo on Iran, and reopen the Strait of Hormuz, a vital waterway for global oil and gas supplies. The war began with an attack by US and Israeli forces on Iran on February 28.

The source explained that the new fund is a private investment mechanism, not a reconstruction or compensation program, and will not include any government funds or grants, adding that companies based in the United States, Arab Gulf states, Asia, South America and Africa have agreed to provide the financing.
The source indicated that the pledged investments include the energy, logistics, manufacturing and transportation sectors.

A senior Iranian source told Reuters that Tehran had initially demanded $400 billion in war damage compensation from the United States, but Washington refused to provide this amount.

Hence, the idea of creating a fund, which will be called the (Reconstruction and Development Fund).

The Iranian source explained that the fund's mechanism includes contributions from countries in the region in various ways, including obtaining loans, establishing lines of credit, or direct financing for the reconstruction of sites damaged by the war, including facilities such as the Mobarakeh Steel Complex, oil refineries, airports, and infrastructure damaged by the conflict in general.

Although Iran is one of the largest economies in the Middle East, it has attracted little foreign direct investment over the past four decades, having been excluded from global capital markets as a result of successive waves of US and international sanctions.

Iran has the world's second-largest proven reserves of natural gas and the fourth-largest proven reserves of oil.

Iran has a young and educated population of over 92 million, as well as a diversified industrial base and huge untapped potential in sectors ranging from petrochemicals and mining to tourism and agriculture.

The source explained that the investment fund is completely separate from the parallel negotiation track regarding lifting US sanctions and releasing frozen Iranian sovereign assets abroad, describing them as two separate financial mechanisms with different goals and timelines.

The fund will not be established or operational until a satisfactory final agreement is reached. The memorandum of understanding, if signed, aims to regulate the process over the next 60 days.

The source said, "The fund will not be established until the final agreement is signed. During this period, the fund's administrators will work with the Iranians and investors to plan and define the scope of the projects."