Thirty-three years after the first economic sanctions were introduced against Iran, the Islamic Republic is feeling the negative effects more than ever.
Ordinary Iranians are reeling from soaring prices for household goods. The official inflation rate is 23%, but most analysts believe it is much higher.
This has already led to street protests, and with foreign reserves almost empty the Iranian government will struggle to contain popular anger.
The first sanctions were introduced by the US following the Iranian Revolution of 1979.
Iran was able to circumvent most of them and the country only began to really feel the squeeze when the UN Security Council began to act against Iran’s nuclear policy in 2006.
Further UN Resolutions were passed in 2007, 2008 and 2010, but the most damaging and quick acting sanctions came this year when the US and the EU moved to ban sales of Iranian oil and targeted the Bank of Iran.
The Iranian government began spending its reserves of foreign currency in order to shore up the value of its own currency, the rial. But in recent weeks, the reserves appear to be running low.
The rial has lost 75% of its value against the dollar, and the real inflation rate appears to be so high that people are buying goods as soon as they are paid, knowing that prices will rise from one day to the next.
Reports from Iran say some currency traders are refusing to trade dollars in protest of the government setting the rial at a fixed rate.
In Ferdowsi square (the major currency exchange hub) some have hung signs saying “dollars not bought or exchanged” or “the price of currency has been fixed, if you have currency it is not worth the listed price”.
According to the Mehr News Agency 93 MPs have signed a petition to question President Mahmoud Ahmadinejad over the currency crisis.
It has already sparked an anti-government demonstration in the capital which had to be dispersed with tear gas fired by riot police.
The sanctions are intended to bring Iran to the table to discuss its nuclear ambitions and open all of the doors of its facilities to prove it is not building a nuclear weapon.
However, ordinary people are suffering, as the UN Secretary General Ban Ki-moon acknowledged this month.
In a report to the UN General Assembly, he wrote: “The sanctions imposed on the Islamic Republic of Iran have had significant effects on the general population.
“(These include) an escalation in inflation, a rise in commodities and energy costs, an increase in the rate of unemployment and a shortage of necessary items, including medicine.”
And in a speech on Wednesday the Supreme Leader, Ayatollah Khamenei, described the sanctions as “barbaric”.
US Secretary of State Hillary Clinton says sanctions could be eased quickly if Iran addresses the question on its nuclear ambitions.
But most Western diplomats believe Tehran is in the process of building nuclear weapons, a charge Iran denies.
Sky News
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