News / Middle East

Iranian Leaders React to Increasing Pain of Economic Sanctions

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Iran is reacting to the increasing pain of economic sanctions. Supreme leader Ayatollah Ali Khamenei is urging greater efficiency and motivation, and Iran's vice president is threatening to stop doing business in dollars and euros.

As new U.S. and U.N. economic sanctions step up the pressure on Iran's economy, Supreme Leader Ayatollah Ali Khamenei is urging his countrymen to change their habits. Fars News Agency reports that the Ayatollah wants Iranians to work harder, use more initiative and be more creative.

Top Iranian vice president Mohammad Reza Rahimi also told journalists Friday that the government was planning to stop selling oil in euros and dollars. Iran has threatened to stop selling oil in dollars, before, but with limited success. It was the first time that Tehran has threatened to stop using the euro.

European Union ambassadors, meeting in Brussels, agreed Thursday to a new package of sanctions targeting Iran's energy sector. The sanctions must be approved Monday at a meeting of EU foreign ministers. The U.N. and U.S. imposed fresh sanctions on Iran, last month, to force it to stop enriching uranium for its controversial nuclear program.

An Iranian delegation, including Oil Minister Massoud Mir-Kazemi, met with Turkish counterparts in Ankara this week, to sign a deal to build a new natural gas pipeline and to increase gas sales to Turkey. Iran signed a similar deal with Pakistan, last month, although it is not clear if it will be implemented.

Deputy Oil Minister and head of the National Iranian Gas Company Javad Owji describes the deal.

He says that a new pipeline will be laid between Mindana and Bazargan, near the Turkish border, to increase the volume of Iranian gas sold to Turkey. He adds that Turkey will own 77 percent of the project and Iran 23 percent, and that it will take three years to complete.

In other economic news, Iran's commerce minister Mehdi Ghazanfari repeated an earlier warning by parliament speaker Ali Larijani that Tehran would respond to any inspection of its cargo ships on the high seas. The latest U.N. sanctions authorize the inspection of any suspicious cargo on ships or planes bound for Iran.

Analyst Houchang Hassan-yari, who teaches at Canada's Royal Military College, says that the recent reactions of Iranian leaders demonstrate a growing realization on their part that sanctions are starting to have a negative impact on their economy.

"All those [economic] problems and all those reactions [by Iranian leaders] are a response to the sanctions imposed by not only the fourth U.N. Security Council [sanctions] resolution, but maybe more importantly the unilateral sanctions imposed by America and now by the European Union," he said.

Recent energy shortages, including gasoline rationing, he argues, are starting to affect all sectors of the Iranian economy. "When, in the context of Iran, you talk about the rise in the price of gas, you will see the impact of that on everything else, and I mean everything: not only transportation, but also production or presentation of tomatoes in the market, bread….everything is going to be impacted," said Hassan-yari.

Hassan-yari says that Iranian threats to retaliate against searches of cargo vessels are mostly empty rhetoric, because many are no longer even willing to sail to Iranian ports due to insurance issues. Lloyds of London began refusing to insure ships sailing to Iran, last week.

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