Tuesday, January 3, 2012

Eye on Iran: Iranian Currency Slides Under Latest U.S. Sanctions

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Top Stories


WashPost: "Iran's ailing currency took a steep slide Monday, losing 12 percent against foreign currencies after President Obama on Saturday signed a bill that places the Islamic republic's central bank under unilateral sanctions. The currency, which economists say was held artificially high for years against the dollar and the euro, has lost about 35 percent of its value since September. Its exchange rate hovered at 16,800 rials to the dollar, marking a record low. The currency was trading at about 10,500 rials to the U.S. dollar in late December 2010... But in Tehran, people said they were bleeding money. Currency traders stopped writing exchange rates on the whiteboards propped against their shop windows as residents were trying to buy foreign currency." http://t.uani.com/vLPQzG

Reuters: "Iran threatened Tuesday to take action if the U.S. Navy moves an aircraft carrier into the Gulf, Tehran's most aggressive statement yet after weeks of saber-rattling as new U.S. and EU financial sanctions take a toll on its economy. The prospect of sanctions targeting the oil sector in a serious way for the first time has hit Iran's rial currency, which has fallen by 40 percent against the dollar in the past month. Queues formed at banks and some currency exchange offices shut their doors as Iranians scrambled to buy dollars to protect their savings from the currency's fall. Army chief Ataollah Salehi said the United States had moved an aircraft carrier out of the Gulf from because of Iran's naval exercises, and Iran would take action if the ship returned." http://t.uani.com/rMC6dB

AFP: "Iran on Monday tested missiles near the Strait of Hormuz, underlining its threats to close the vital oil-transit waterway as the West readies to impose more economic sanctions over Tehran's nuclear drive. The launch of three missiles took place on the final day of war games in waters east of the strait at the entrance to the Gulf, said official media and a navy spokesman, Commodore Mahmoud Mousavi. The United States, which keeps its Fifth Fleet based in the Gulf, has warned it will not tolerate a closure of the strategic channel. France said the tests sent a 'very bad signal to the international community' and stressed the Strait of Hormuz must remain open to shipping. Israeli Defence Minister Ehud Barak said the Iranian wargames were a sign of the regime's 'distress' in the face of tightening Western sanctions." http://t.uani.com/sXW7Xl

Iran Disclosure Project

Nuclear Program & Sanctions

AP: "Iran said Tuesday that the steep depreciation in the country's currency against the U.S. dollar was not linked to U.S. new sanctions targeting its Central Bank, while officials geared up for a meeting to assess possible measures to shore up the riyal in an already ailing economy. Since President Barack Obama on Saturday signed into law a bill that takes aim at Iran's Central Bank, the riyal hit a new record low on Monday, dropping by around 13 percent against the dollar in just two days and reaching 18,000 riyals to the dollar. The official rate, which few but the government pay attention to, is 11,180 riyals to the dollar. The currency rebounded Tuesday to about 17,000 riyals to the dollar." http://t.uani.com/tgunI8

AFP: "French Foreign Minister Alain Juppe said on Tuesday that Iran was continuing to develop nuclear weapons and called for stronger sanctions against Tehran. 'Iran is pursuing the development of its nuclear arms, I have no doubt about it,' he told French television I-Tele. 'The last report by the International Atomic Energy Agency is quite explicit on this point.' 'This is why France, without closing the path of negotiation and dialogue with Iran, wants stricter sanctions,' he added. He said French President Nicolas Sarkozy has proposed a freezing of assets of Iran's central bank and an embargo on exports of Iranian oil, a move also being considered by the European Union." http://t.uani.com/sfzIuD

Domestic Politics


NYT: "Iran's conservative Islamic hierarchy has been seeking to portray the coming parliamentary elections as an enviable model of Middle East democracy and an inspiration for the Arab Spring revolts. But a likely boycott by Iran's harshly silenced reformists and fears of election-related violence, combined with dire economic problems arising from Iran's isolation over its suspect nuclear program, are creating new challenges for Iranian leaders as they face their first domestic legitimacy test since the disputed presidential election of 2009. Despite assertions by the leaders that reformist candidates will be allowed to participate in the parliamentary elections, to be held in March, the two principal reformist opposition figures in Iran, Mir Hussein Moussavi and Mehdi Karroubi, both former presidential candidates, remained under house arrest for most of 2011, their supporters say, and both are urging followers to stay away from the polls." http://t.uani.com/tlUxNJ

Reuters: "The daughter of influential former Iranian president Akbar Hashemi Rafsanjani was on Tuesday sentenced to jail and banned from political activities for 'anti state propaganda' dating back to the 2009 disputed presidential election, Iranian media reported. The Islamic state has piled pressure on the opposition ahead of a parliamentary election in March 2, the first test of the clerical establishment's popularity since the 2009 vote that critics say was rigged to re-elect Mahmoud Ahmadinejad." http://t.uani.com/w1SscN

Foreign Affairs


AFP: "A trial in Iran of an American-Iranian man accused of being a CIA spy has finished and he is now awaiting the verdict, the country's chief prosecutor said Monday, according to the Mehr news agency. The prosecutor, Gholam Hossein Mohseni Ejeie, also rejected a US government call for the accused man, Amir Mirzai Hekmati, to be released. The prosecution has demanded the 'maximum punishment' in the case, which presumably means the death penalty." http://t.uani.com/vTcNTr

Opinion & Analysis


Amir Taheri in the NYPost: "A month after 'Supreme Guide' Ali Khamenei warned that his Islamic Republic was ready for war, Iran has provided a glimpse of how it envisions a clash with America in the form of a 10-day aero-naval exercise - including long-range missile tests yesterday - aimed at closing the strategic Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and the Indian Ocean. Tehran, hoping to use oil as a weapon, has declared that any attempt at banning its petroleum exports would lead to a closure of the strait. 'If we cannot export oil, not a drop will be allowed to be exported by anyone else,' says Muhammad Reza Rahimi, Iran's first assistant president. So sanctions on oil exports - which America and allies are promoting as the centerpiece of enhanced sanctions against the mullahs - would be a casus belli for Tehran. For Iran, stopping oil exports is a red line, because 55 percent of the government's income and 80 percent of the country's foreign earnings come from oil. Mahmoud Bahmani, the governor of the Central Bank of Iran, says Tehran has currency reserves for up to six months and could ensure essential imports for up to two years. Nevertheless, he describes the planned sanctions as 'a declaration of war.' Iran's national currency, the rial, is already in free fall, having lost almost half of its value in a month. Unable to seek a diplomatic way out of the crisis, the mullahs appear to have opted for the Samson option, threatening to inflict as much damage as possible. 'We will stop the flow of oil, crippling the global economy,' writes the Iranian daily Kayhan. 'When the price of oil hits $200 or £400 a barrel, we shall see who are the losers.' Two questions remain: Could Iran close the Strait of Hormuz? And if it could, would that push oil prices through the roof? The maneuvers show that the answer to the first question is, at best, a maybe." http://t.uani.com/uJHSrp

Ahmed Al Attar in The National: "The recent statements coming out of Iran, including by Vice President Mohamed Reza Rahimi, have threatened to close the Strait of Hormuz if the West imposes sanctions on Iranian oil exports. But the reality of the regime's limited military capacity makes this seem like more of a bluff than an actual plausible course of action. One only has to refer back to the Iran-Iraq war in the 1980s, or even the recent capture of a US surveillance drone, to realise that the Iranians should not be underestimated. But it is also important to not allow their strategic bravado and inflammatory rhetoric to influence oil prices and the world economy. The Iranians should not be discounted, but equally they must not be overestimated. Iran's recent Velayat 90, or 'Supremacy 90', manoeuvres were intended to be a show of force to display its capabilities. It deployed anti-shipping missiles, anti-air missiles and small boats that would no doubt be important players if it did try to close the strait. The exercise involved some actual real-world training, but the dominant component was to send a message to its neighbours. Some of the weapons systems, especially the 1960s-era F-4 fighters and helicopters, would be totally irrelevant and were probably included for reasons of prestige and propaganda. If Iran was more serious about closing the strait, then its manoeuvres would have been much more realistic. But how real is Iran's capability if it did wish to start hostilities? Firstly, the consequences of such an attempt must be taken into account. A naval conflict in a strait, where approximately 15 million barrels a day pass through, would send oil prices skyrocketing, greatly damaging the struggling world economy. There is no doubt that the US and Nato, and possibly other major powers, would retaliate against such a move. An operation to try to restrict shipping in the strait would be an act of desperation and completely counterproductive. Iran's conventional surface fleet would be sitting targets, and face annihilation from aerial attacks akin to what happened to Libya's mechanised ground forces in the recent Nato-led offensive. Its manoeuvres would be limited to simply trying to survive, which is one reason why Iran has not heavily invested in a surface fleet." http://t.uani.com/tTPGSd

Eye on Iran is a periodic news summary from United Against Nuclear Iran (UANI) a program of the American Coalition Against Nuclear Iran, Inc., a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. Eye on Iran is not intended as a comprehensive media clips summary but rather a selection of media elements with discreet analysis in a PDA friendly format. For more information please email Press@UnitedAgainstNuclearIran.com

United Against Nuclear Iran (UANI) is a non-partisan, broad-based coalition that is united in a commitment to prevent Iran from fulfilling its ambition to become a regional super-power possessing nuclear weapons. UANI is an issue-based coalition in which each coalition member will have its own interests as well as the collective goal of advancing an Iran free of nuclear weapons.

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