Are tightened international sanctions against Iran working?
As the BBC reports:
In the past seven days, Iran’s rial has has lost 25% of its value; it is now, at best, worth only a quarter of what it was 18 months ago. And the freefall seems to have no end in sight.
Recent days in Iran have seen runs on foreign currencies and on gold – assets that are easily liquefied in the domestic market or transferable overseas.
On the one hand Iranians have lost their trust in their government’s grip over the economy, and on the other they fear their country may end up in a military confrontation with Israel over its nuclear programme.
Therefore, they have good reason to change whatever they have in hand into currencies whose value is sustained internationally, or into gold bullion which they can throw into a suitcase if they want to hop aboard a flight and leave the country.
On Tuesday morning the window of licensed exchange bureaux showed rates never seen before: every US dollar bought 35,000 rials; currently the lowest valued currency per unit in the world.
Other estimates have put the decline at closer to 40 percent in a week. Prices for basic food items — many of them imported — have soared in response, and a petition signed by 10,000 Iranian factory workers complaining about the conditions has been delivered to the Labor Ministry. Iranian leaders this week also tried to ban access to Google and Gmail before backing off the effort as hopeless. And in Israel, Haaretz reports that President Mahmoud Ahmadinejad is being set up by his rivals as the fall guy for the economic crisis.
Iran’s currency is collapsing because its oil industry is also collapsing; recent estimates are that oil production has fallen by as much as half because under sanctions, the Iranians simply can’t find customers who are willing to buy their product. Those dwindling few that want to buy Iranian oil often find themselves unable to pay for it, thanks to strict banking sanctions. In July, for example, President Obama approved new sanctions on any financial institution in the world that helps to facilitate the purchase of Iranian oil.
Israeli officials also seem to have recommitted themselves to seeing the sanctions option through to its ultimate outcome, whatever that may be”
JERUSALEM — Benjamin Netanyahu, the prime minister of Israel, plans to travel to Europe before the end of the year, among other things to press for a toughening of sanctions against Tehran, Israeli officials said on Tuesday. The plans appeared to be another indication of a shifting Israeli emphasis, at least for now, toward efforts to stop the Iranian nuclear program by means other than military action….
The growing Israeli focus on a new round of sanctions comes amid reports of the deep impact that current sanctions are having on the Iranian economy. A recent internal report prepared by the Israeli Foreign Ministry stated that the sanctions may, according to some assessments, also be affecting the stability of the Iranian government, which insists that its nuclear program is for purely peaceful purposes.”
– Jay Bookman