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In Iran, the sting of sanctions begins to take hold

Iranians believe economic sanctions will hurt only them, not the country's leadership.

Rafsanjani’s message about who is to blame for the sanctions and their effects was characteristically ambiguous, but many Iranians are beginning to express frustration with what they see as their lives being used as pawns in a larger political game.

“We do so much business with foreign companies, and in dollars, that if all this keeps up we’ll be in real trouble. Not just us, everyone who wants to do any sort of transaction in the coming months. Nothing is clear,” lamented Abbas Hosseini, who owns a travel agency.

Stuart Levey, undersecretary for terrorism and financial intelligence for the U.S. Department of Treasury, and one of the principal designers of the new sanctions, told the Center for Strategic and International studies last week that the sanctions were having their desired effect — to pressure the Iranian government into giving up its pursuit of nuclear weapons.

“The financial measures the U.S. and others around the world are implementing are imposing serious costs and constraints on Iran,” he said.

But despite Levey’s claim, the only certain truth — which Obama alluded to during his first-ever interview for a Farsi-speaking audience on the BBC’s Persian Service on Sept. 24 — is that the sanctions have increased the price of consumer goods, dramatically affecting the lives of Iranians.

“This is not a matter of us choosing to impose punishment on the Iranians,” Obama said during the interview. “This is a matter of the Iranians’ government I think ultimately betraying the interests of its own people by isolating it further.”

Even before the sanctions, Iran faced high rates of inflation and unemployment, with official estimates of 16.8 percent and 11.8 percent respectively.

Part of the problem is the country’s enormous subsidies. Subsidies on consumer goods and utilities — most notably on gasoline, which has helped to create one of the most energy unconscious societies on Earth — costs the Iranian government an estimated $100 billion per year.

Ahmadinejad has been trying to reduce subsidies for more than a year, but fearing a public backlash, government officials have now delayed their plans, which were initially scheduled for this month.

The Iranian public, which has long believed that cheap fuel is their birthright, is often sensitive to rising energy costs. In 2007, when gas prices were increased sharply, riots broke out and fueling stations throughout Tehran were set on fire.

And now, with a new round of sanctions taking their toll, concerns about public unrest are on the rise. Few, however, think the Iranian leadership will make the changes needed to soften the blow.

“These sanctions don’t really affect the regime. They drive the prices up of some consumer goods because now we have to get them on the black market, but [Iranian government] is not worried about that,” said one mathematics professor at a top Tehran technical university, who asked that his name not be used for safety reasons. “They will continue doing business, and make money.”

http://www.globalpost.com/dispatch/middle-east/100929/iran-sanctions-economy-obama