Fears that Western Sanctions on Iran Could Cripple Local Economy
THE GUARDIAN: Iran's dependency on oil means an embargo, if fully implemented, has potential to bring the economy to its knees

Western sanctions on Iran are compounding the country's economic woes, sending the national currency tailspinning, making dollars hard to come by and forcing ordinary citizens to rush to stockpile staples.

Iranian officials have in the past been quick to play down the impact of the raft of sanctions imposed on Tehran because of its nuclear programme, arguing they have in fact made the regime "self-sufficient" in many areas.

But the latest US and EU embargo on the imports of oil from Iran introduced in the past five weeks has left the leadership little choice but to admit the severity of the problem. In a recent speech at the Iranian parliament, president Mahmoud Ahmadinejad described the embargo "the heaviest economic onslaught on a nation in history".

Iran relies on crude sales for 80% of its exports revenue and also providing most of the foreign currency in the country. The full impact of the embargo is likely to be felt in summer when the new sanctions kick in properly, but evidence of knock-on effects through the Iranian economy are multiplying. The initial impact was felt on the local currency market where a shortage of foreign exchange caused a looming crisis. As a result, the value of Iran's rial against the dollar has fallen to a record low, even experiencing devaluation of more than 50%. » | Saeed Kamali Dehghan | Wednesday, February 01, 2012