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Top Stories
WashPost:
"Prices for beef and lamb had already soared out of reach, meaning
fewer of the kebabs and stews beloved by middle-class Iranians. But when
the cost of yogurt spiked this week, Iran's economic troubles hit home
for virtually every household in the country. 'Last year you could buy a
carton for 2,000 tomans,' about $2, Mehdi Khalaji, an Iranian-born
scholar and blogger now living in Washington, said Thursday, referring to
the creamy side dish that is de rigueur at all Iranian meals. 'This week
the same amount costs 5,000 or even 6,000 tomans.' Protests over such
price hikes brought thousands into the streets this week in central
Tehran... Sales of Iranian crude are down about 40 percent compared with last
year, depriving the country of billions of dollars a month, industry
analysts say. This week, the rial lost 40 percent of its value. Shrinking
oil revenue in turn weakened the rial, driving up the inflation rate and
joblessness. But in recent weeks, the slow upward creep in prices turned
into a gallop, said Steve H. Hanke, professor of economics at Johns
Hopkins University and a senior fellow at the Cato Institute.Based on an
analysis of Iran's black-market currency exchanges, Hanke said prices in
Iran now appear to be doubling every 40 days, depleting both the savings
and purchasing power of ordinary Iranians, particularly in the
cities." http://t.uani.com/PeB9WX
NYT:
"For months, since the imposition of harsh, American-led sanctions
over Iran's nuclear program, the country's leaders have sworn they would
never succumb to Western pressures, and they scoffed at the idea that the
measures were having any serious impact. But after a week in which the
Iranian currency, the rial, fell by a shocking 40 percent and protests
began to rumble through the capital, no one is making light of the
mounting costs of confrontation. In the Iranian capital, all anyone can
talk about is the rial, and how lives have been turned upside down in one
terrible week. Every elevator ride, office visit or quick run to the
supermarket brings new gossip about the currency's drop and a swirl of
speculation about who is to blame. 'Better buy now,' one rice seller
advised Abbas Sharabi, a retired factory guard, who had decided to buy 900
pounds of Iran's most basic staple in order to feed his extended family
for a year." http://t.uani.com/OHeeUa
WSJ:
"The U.S. and Europe are working on new coordinated measures
intended to accelerate the recent plunge of Iran's currency and drain its
foreign-exchange reserves, according to officials from the Obama
administration, U.S. Congress and European Union. The first salvos in
this stepped-up sanctions campaign are expected at a meeting of EU
foreign ministers on Oct. 15, including a ban on Iranian natural-gas
exports and tighter restrictions on transactions with Tehran's central
bank, European officials said. A number of additional banks are also
expected to be targeted, in the continuing effort to press Supreme Leader
Ayatollah Ali Khamenei to curb his country's nuclear program. The U.S.
and EU are also considering imposing a de facto trade embargo early next
year by moving to block all export and import transactions through Iran's
banking system -- which could further choke off Tehran's access to foreign
currency, U.S. and European officials said. To that end, U.S. lawmakers
are drafting legislation that would require the White House to block all
international dealings with Iran's central bank, while also seeking to
enforce a ban on all outside insuring of Iranian companies. There is also
a legislative push to block investment in Iran's energy sector by closing
off loopholes in existing sanctions." http://t.uani.com/Wu4FaK
Nuclear Program
NYT: "With
harsh economic sanctions contributing to the first major protests in Iran
in three years, Iranian officials have begun to describe what they call a
'nine-step plan' to defuse the nuclear crisis with the West by gradually
suspending the production of the uranium that would be easiest for them
to convert into a nuclear weapon. But the plan requires so many
concessions by the West, starting with the dismantling of all the
sanctions that are blocking oil sales and setting off the collapse of the
Iranian currency, that American officials have dismissed it as
unworkable. Nonetheless, Iranian officials used their visit to the United
Nations last week to attempt to drum up support, indicating that the
country's supreme leader, Ayatollah Ali Khamenei, is finally feeling the
pressure. 'Within the intelligence community, I think it's fair to say
that there is split opinion about whether the upper level of the regime
is getting seriously worried,' one senior intelligence official said when
asked why the Iranians appeared to be backing away from their earlier
stand that nothing would stop them from producing more medium-enriched
uranium, which can be turned into bomb fuel in a matter of months." http://t.uani.com/VEiMe2
Sanctions
NYT:
"Most merchants in Tehran's grand bazaar reopened for business on
Thursday as an unusually large number of police officers were deployed
around the city's black-market money trading district, witnesses
reported, a day after a crackdown on suspected speculators led to civil
disturbances and a large protest march by Iranians demanding relief from
the plummeting value of the currency, the rial. Iran's Fars News Agency
reported that 16 people, described as 'elements of disorder in the
currency market,' had been arrested during the Wednesday protests, the
first outbreak of public anger over the devalued rial and other acute
economic problems that have been building in Iran for the past few
years... Witnesses in Tehran said there was no resumption of protests
over the rial, which has fallen by about 40 percent since last week and
had contributed to panic selling on the black market by Iranians worried
as they watch the value of their rials evaporate." http://t.uani.com/SBFcf2
Reuters:
"The European Union is poised to ban imports of Iranian gas as part
of a set of new measures to ratchet up pressure on the Islamic Republic
over its nuclear programme, diplomats said on Thursday. Diplomats from EU
member states have started preparing a package of sanctions against Iran
with a goal of formally adopting them at a meeting of foreign ministers
on October 15 in Luxembourg. Late on Wednesday, they reached a
preliminary deal to ban gas imports, the first measure to win approval in
the package, which also consists of various finance and energy-related proposals,
three EU diplomats said." http://t.uani.com/QOsx4N
WSJ:
"Antigovernment protests in Iran linked to the country's weakening
currency have raised hopes in Israel that international sanctions are
working to undermine Tehran, lowering the likelihood of an Israeli strike
against Iranian nuclear targets in the coming months. Prime Minister
Benjamin Netanyahu has frequently dismissed sanctions as ineffective in
slowing Iran's enrichment program. But, the unrest that erupted in Tehran
on Wednesday-which subsided on Thursday-is causing Israeli officials to
reconsider, analysts and officials said. 'Everything has changed' since
the outbreak of the demonstrations on Wednesday, an Israeli official
said. 'You can't say now that the sanctions are having no impact at all.
It is self-evident.' While the sanctions' apparent effectiveness could
undermine Mr. Netanyahu's emphasis on the need for a credible threat of
force, a faltering Iranian government would nonetheless enable him to
take credit for pushing the international community for tougher
sanctions." http://t.uani.com/PeCixM
Reuters:
"Iran will defeat a 'conspiracy' against its foreign currency and
gold markets, an adviser to supreme leader Ayatollah Ali Khamenei said on
Friday, as pressure mounts on authorities to deal with the rapid collapse
of the rial. 'Iran is overcoming the psychological war and conspiracy
that the enemy has brought to the currency and gold market and this war
is constantly fluctuating,' Gholam Ali Haddad Adel, an adviser to
Khamenei, said in a report by the semi-official Fars news agency. 'The
arrogant powers, in their crude way, think that the nation of Iran is
ready to let go of the Islamic revolution through economic pressure but
we are establishing Iran's economic strength,' he said." http://t.uani.com/Ri0sUo
Bloomberg:
"An Iranian supertanker is heading to South Korea with a cargo of
oil, according to shipping data, as the Islamic republic uses state-owned
tankers to make deliveries in response to sanctions over its nuclear
program. The Brawny, a very large crude carrier that can take on 2
million barrels of oil, left the Iranian port of Kharg Island yesterday
and is provisionally scheduled to discharge its cargo at Daesan in South
Korea, according to transmissions captured by IHS Inc. (IHS) on
Bloomberg. National Iranian Tanker Co. owns the vessel. Hyundai Oilbank
Co. operates a 395,000 barrel-a-day refinery in Daesan." http://t.uani.com/QKOq8f
Foreign Affairs
AP:
"The government-appointed body that oversees Voice of America and other
U.S.-sponsored broadcasts is accusing Iran of jamming radio and
television programming into the Middle East and eastern Europe amid
protests in Iran over the Iranian currency crisis. The Broadcasting Board
of Governors said Thursday that the jamming is coming from inside Iran
and violates international telecommunications regulations. It said the
interference began on Wednesday and is affecting VOA's Persian service,
along with Radio Free Europe/Radio Liberty's and Farsi-language
programming from Radio Farda. The jamming is also affecting the BBC, it
said in a statement. The board said the jamming was affecting satellite
transponders operated by the Paris-based European satellite Eutelsat and
had blocked programming not only to Iran but also broadcasts aimed at
people in Georgia, Armenia, Bosnia and Korea." http://t.uani.com/SxZeZW
Opinion &
Analysis
Roshanak
Taghavi in CSM: "The value of Iran's national
currency, the rial, plunged to its lowest against the dollar in more than
two decades this week, plummeting by an estimated 40 percent in the past
four days. And while the precipitous drop has been brought on by US
sanctions, Iranians are in large part blaming the government's massive
economic mismanagement. The rial has declined roughly 80 percent in
the past year, and the street rate is now around 37,000 rials to the
dollar. But economists and oil officials in Tehran say they were less
surprised by the breadth of the currency's depreciation than by the rapid
speed at which it fell. Indeed, many have predicted the rial's continued,
albeit gradual, decline for more than a year. The greatest shock has been
on the Iranian street, where people, panicked by the sudden drop in the
national currency's value, have been scrambling to trade their rials for
safe currencies such as the dollar and euro. 'Before, the currency
situation was dysfunctional, but bearable: The rial was getting worse,
but gradually. Now, it's just falling,' says a Tehran-based businessman
who runs a factory outside the capital. Though what exactly
triggered the sudden currency decline is still unclear, some speculate
that the Central Bank's launch last week of a formal currency 'exchange
center' may have inadvertantly fed the frenzy for dollars. Intended to
control fluctuations in the exchange rate, the center allows importers of
basic necessities, such as meat, rice, or oil to purchase foreign
currency at a 'preferential' rate that is actually only slightly below
the street rate. 'The center made it seem like the government is giving up
trying to manage the rate, and is allowing the exchange rate to stay at
these numbers,' says a veteran Tehran-based analyst, speaking by
telephone on condition of anonymity. 'It gave the message to the business
community that the government does not have the currency to keep up with
the market. Now there is panic.' Economic pressure resulting from US
Treasury sanctions is widely recognized as a significant force behind the
rial's massive decline. But the blame for Tehran's deteriorating economy
is being resoundingly placed on the Iranian government itself for failing
to cushion the country against the impact of sanctions many viewed as
inevitable. Much of the criticism is based on the fact that the
government seems to have done little to prepare for a situation it must
have seen coming. Washington sanctions foreign firms that purchase
Iranian oil and penalizes banks engaging in financial transactions with
the Islamic Republic. It first implemented financial sanctions on Iran in
2006, and four rounds of sanctions by the United Nations Security Council
followed. Tehran's banking system became increasingly squeezed after
2007, as Washington boosted efforts to get US allies and other foreign
governments and private entitites to implement unilateral financial sanctions
imposed by the US Treasury.'This government has been the richest in the
history of the Islamic Republic, and while it should have reserved
billions of dollars for a future day like today, it did not,' says the
Tehran-based analyst. Between 2005 and 2011, Tehran earned an estimated
$465 billion from oil exports alone, according to data from the
Organization of Petroleum Exporting Countries. Critics of Iranian
President Mahmoud Ahmadinejad say his administration's extravagant
spending during this period - on infrastructure and housing projects,
subsidized loans, and cash handouts to lower-income and working-class
Iranians - boosted inflation and diminished Iran's currency reserves. For
the past two years, as US allies in western Europe and Asia deepened their
implementation of US Treasury sanctions against the Islamic Republic -
essentially isolating Iran from much of the global financial system - the
Central Bank's access to foreign exchange reserves held in accounts
overseas has become severely constrained. This has left Iran vulnerable
to currency speculation because it doesn't have a thriving private
sector, and unlike other oil producers in the Persian Gulf, hasn't built
up its foreign assets or laid aside enough oil earnings to be able to
support its currency, says Hossein Askari, an economist at George
Washington University. At the same time, Iran has endured a sharp decline
in oil sales, which started to fall in late 2010 due to the rise in
transaction costs for purchases of Iranian oil resulting from
sanctions. A European embargo against purchases of Iranian oil,
imposed in July 2012, has pushed Iran's oil sales down even
further. Today, primary purchasers of Iranian oil are refineries
from Turkey, Japan, South Korea, China, Taiwan and India. The country's
oil exports, which fluctuate between 900,000 to 1.1 million barrels a
day, are 55 percent lower than what they were at this time last
year." http://t.uani.com/T9jd0B
Meir Javedanfar in
The Diplomat: "Iran is facing a threat even more
severe than the Stuxnet computer virus, a sophisticated line of code
which was reportedly sponsored by the U.S. and Israel, and which
destroyed some of Iran's uranium centrifuges in 2010. In Persian, this
affliction is called Siyasat Bazee - in English, playing politics. The
precipitous fall of the Iranian rial against the U.S. Dollar, which has
depreciated by more than 40% in the past week and by 75% since the end of
last year, points to the perils of Iran's leaders using economic policy
to suit their own political interests. The collapse of the currency
ignited protests on the streets of Tehran on Wednesday and some pundits
are wondering whether inflation will spell the end of the regime. Iran is
facing increasingly tough economic sanctions with potentially ruinous results
for the regime. Over the summer, the EU began an embargo on imports of
Iranian oil; it is now looking to clamp down on Iran's central bank. The
U.S. has already been pressuring purchasers to stop buying Iranian oil by
threatening to block access to the American financial system to entities
who deal with Iran's central bank, which is Iran's primary mechanism for
processing oil sales. One reason the rial has depreciated so much in such
a short span of time is because sanctions have choked off the sale of
oil. Oil exports are Iran's biggest source of hard currency, so fewer
sales equate to a reduced availability of dollars. Scarcity has therefore
pushed up their value relative to the rial, with too many rials chasing
too few dollars. This is only set to get worse: the International Energy
Agency estimated that Iran exported 1.1 million barrels of oil per day in
August, a 56% drop compared with December of last year. Meanwhile, those
countries that are still purchasing Iran's oil are finding it extremely difficult
to transfer foreign currency payments. At moments of uncertainty, the
Iranian government needs to present a united and decisive front. It needs
to show that it has a clear economic prescription to cure the country's
current economic crisis in order to bolster consumer confidence and
arrest the rial's freefall. Instead, Siyasat Bazee has made the situation
worse. Iranian consumers are confronted with the spectacle of petty
factionalism and political haymaking. The powerful Islamic Revolutionary
Guards Corps is exploiting the current crisis to settle scores with
President Ahmadinejad by publishing articles and caricatures on its
affiliated news sites. Meanwhile, the president and his parliamentary
rival, speaker Ali Larijani, are each using the crisis to publicly
criticize one another. Ahmadinejad has defended his record from claims of
economic mismanagement and blamed Western sanctions for the fall of the
rial. Yet the president has undoubtedly contributed to the country's
problems. Since 2005, his frequent, populist cash-handouts have increased
the money supply by nearly 500% and pushed up inflation with a flood of
cheap rials. Ahmadinejad is not the only person at fault. Supreme Leader
Ayatollah Ali Khamenei has played politics too, perhaps more so than
anybody else. Part of the strength of his leadership is based on keeping
different political factions divided, so that they don't become strong
enough to challenge him. This has encouraged intense infighting, where
each faction tries to outmaneuver the other with Siyasat Bazee instead of
working together collectively to tackle Iran's problems." http://t.uani.com/OHilj9
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Eye on Iran is a periodic news summary from United Against
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