Iranians rich and poor caught in sanctions net

Reuters News
Posted: Jul 06, 2011 9:14 AM
Iranians rich and poor caught in sanctions net

By Parisa Hafezi

TEHRAN (Reuters) - Sanctions on Iran are aimed at hampering its nuclear program, but ordinary people both rich and poor are getting caught in their tightening net.

"Each time my son wants to wire money for me from abroad, I have to check with my Iranian bank about international banks that interact with Iran," said retired police officer Asghar Hesami.

"The list is getting shorter each month."

The West and United Nations have been steadily increasing sanctions to deter Tehran from pursuing a nuclear program, despite Iran's denial that it is seeking to develop weapons.

The energy and banking sectors have been targeted but in late June the United States also blacklisted Iran's main port operator, which it suspects is run by the Revolutionary Guards -- a move potentially disrupting key food imports.

In response to sanctions, several foreign oil companies have cut business with the Islamic Republic, some of them stopping sales of jet fuel. Most European countries now refuse to refuel Iranian passenger planes.

"Three times a week, I pray to God to help me fly (my) passengers," said Davoud, 45, whose Tehran travel agency runs trips to Europe and other tourist destinations.

"Each time I go to the edge of losing my business as I don't know whether refueling authorization will be granted."

The United States also blacklisted Iran Air and a subsidiary in June, saying the national airline had carried missiles, rockets and other military equipment for the government.

But Iranian authorities dismiss sanctions as ineffective and useless and Mahmoud Ahmadinejad, president since 2005, has remained defiant.

Some Iranians back his tough stance but many worry about international isolation, economic stagnation and the unrest that a possible spread of the "Arab Spring" uprisings into the country might bring.

"We do not want another revolution... I am tired of our leaders' fights over gaining more power... I am tired of the growing economic pressure," said retired teacher Reza Akbari, 68.


Richer Iranians have found ways round some of the restrictions, merely importing their favorite luxury Western goods indirectly, from the Gulf states and other countries.

"Such limitations cannot stop other countries from trading with Iran. Money talks," said a government official, who asked not to be named.

But away from the flashier stores, people say they are struggling to cope, squeezed by soaring rents and grocery bills on the one hand and stagnant salaries on the other.

In December the government cut costly fuel and food subsidies, sending prices rising. Ahmadinejad said this was done to make Iran less vulnerable to sanctions.

Critics say that move worsened inflation, which officially stands at 14 percent but analysts estimate at nearer 50 percent.

"The establishment might find ways to get around sanctions. But the cost of housing and basic food has doubled or even quadrupled. People are worried about their day-to-day life," said political commentator Hamed Sehati.

"I spent 70,000 rial ($7) at the grocery shop today ... it is equal to my salary (pension) per day ... there is no money left for other expenses," said pensioner Mohammad Samadi, 65.

"I am worried all the time about not being able to pay my rent."

Sanctions have a strong psychological impact on ordinary people, who blame them for higher inflation.

Hamid Ghabadi, owner of a tile factory, said he can't pay his workers any more.

"I had to lay off at least 200 employees because of the increasing costs," he said.

Sanctions on banks have made it more difficult for businessmen to finance deals and get letters of credit.

"My business is not going well because of sanctions. Trade transactions in foreign currencies have become very difficult if not impossible," said Reza Mirzai, head of an export company.

A growing number of trading houses and other international firms have stopped doing business with Iran. Many international banks refuse to open accounts for Iranians and have frozen accounts belonging to dozens of Iran-linked firms.

In 2008, a French bank closed Iranian housewife Mitra Sami's account of 20 years, saying it was "suspending business with Iran and parties in the country."

"They gave me one month notice before closing the account," she said. "I have no credit cards now."


Many conservatives who backed Ahmadinejad's disputed 2009 re-election are nevertheless blaming sanctions on his harsh anti-Western rhetoric and also criticize his economic policies.

Media have carried reports of workers walking out of government-owned factories because they have not been paid for months. Unemployment is officially around 10 percent, but critics put it closer to 15 percent.

The sanctions are also having an impact on Iran's rial currency which has fluctuated in value in recent months. In an apparent bid to maintain foreign currency reserves, Iranian banks have imposed limitations on selling dollars and euros.

The Central Bank devalued the rial by almost 11 percent in early June and has announced a raft of other measures to prop up the currency including restrictions on sales of foreign cash.

Some politicians and influential clerics have warned the government over economic hardship and the specter of further sanctions, which they fear could revive anti-government protests that jolted the country in 2009.

A power struggle among hardline rulers, including clerics wary of being sidelined by Ahmadinejad, has deepened since April when Iran's most powerful authority Supreme Leader Ayatollah Ali Khamenei confronted the president publicly.

But the ruling establishment may paper over the cracks rather than risk fatal damage to its grip on power, analysts say, doubting that the deepening tension could imperil Ahmadinejad's chances of serving out his term until 2013.

(Editing by Richard Meares)