In Iran, the sting of sanctions begins to take hold

TEHRAN, Iran — On the first day of a recent Iranian workweek, a day after U.S. President Barack Obama gave a rare televised address to the Persian-speaking world, Tehran residents were seething.

They didn’t like the president’s message that the severe economic sanctions the United States and other countries have imposed on Iran are its leadership’s own doing. The sanctions are overly aggressive and unjust, they said — a perhaps reasonable view given how difficult life is becoming for them.

“Obama … said that these sanctions are meant to affect the Islamic republic government, but without affecting people it can’t affect the government,” said Maryam, a 26-year-old graduate student who works part time for a company that imports construction material.

“It affects every aspect of our lives: transportation, the ingredients in the food we eat, even my university dues are all up considerably since this time last year, and no one in our family is earning any more money than we were then. We’re just happy to still have work.”

Although Obama said harming individuals is not the aim of the sanctions, it has so far been the only discernible result.

Iranians are beginning to feel the sting.

The most often cited example of the rising costs is the price of meat, which is now being sold for an exorbitant $20 a kilogram in Tehran, an impossible purchase when the average monthly salary here is less than $500.

Iran, once ranked seventh in the world in consumption of cosmetic and beauty products, most of them imports, is now facing a shortage of many of those as well. And taxi prices, almost entirely unregulated, have increased by some 20 percent over the past month.

Perhaps most startling of all, however, was the decrease in value of the Iranian rial against the dollar on Wednesday, with the rial dropping about 20 percent, to the weakest it has ever been.

But what’s even worse, many Iranians say, is the feeling of isolation the sanctions have created.

“Our connections with the outside world are diminishing every day,” said one Tehran-based photojournalist. “It feels like we’re being made into another North Korea, and it’s not just our leaders doing this, it’s the rest of the world, too.”

While it is becoming clear that the sanctions are hurting the economy, it is less clear if the Iranian government is feeling the pressure alongside the Iranian people.

Contradictory messages from Iran’s leaders coupled with few reliable sources on the ground have forced Western powers into a familiar yet uncomfortable dilemma; they have to guess what is actually going on here.

During their controversial trip to New York for the United Nations General Assembly last week, both President Mahmoud Ahmadinejad and Iranian Foreign Minister Manoucher Mottaki spoke, incredibly, about the strength of Iran’s economy.

“Despite the global financial crisis, Iran's economy not only averted a recession, but continues to maintain a good position by achieving an eye-catching growth in its stock exchange market and reducing the national unemployment rate,” Mottaki said.

Some Iranian lawmakers have taken an even bolder stance, claiming that the sanctions have actually had a positive influence on the country’s economy.

“It has been nearly 30 years that Iran has been under unilateral economic sanctions imposed by world powers and particularly Western countries,” Hossein Naqavi Hosseini, a member of parliament, said over the weekend, invoking a mixture of revolutionary and nationalist rhetoric. “[But] relying on their capabilities [Iranians] can turn sanctions into opportunities and easily overcome the biased policies of the enemies.”

He did not elaborate.

Some Iranian political figures, meanwhile, have taken a conflicting tone.

Former president Ayatollah Ali Akbar Hashemi Rafsanjani earlier this month told the Assembly of Experts, one of the country’s most influential clerical bodies, to take the sanctions seriously, but did not point any fingers.

“We have never been faced with so many sanctions,” he said. “I would like to ask you and all the country’s officials to take the sanctions seriously and not as a joke.”

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.”