TEHRAN –- Soon after he learned of the new European Union sanctions on Iran, Mohammad decided to take out a large bank loan so he could place an order for zinc plates from China.
The owner of a print shop in downtown Tehran, he reasoned that the tough sanctions, which prohibit transactions between European and Iranian banks, will further devalue the rial, which has already plummeted in recent weeks. Therefore, getting a loan quickly will allow him to take advantage of the current exchange rate and prices.
“I have placed an order… so that I don’t lose more of my purchasing power," said Mohammad, who didn’t want his last name published. This “will be gradually less painful as the purchasing power of local money noise dives."
In announcing the new round of sanctions Monday, the EU said it resulted from "serious and deepening concerns" over Iran’s nuclear development program. In addition to the restrictions placed on banks, the sanctions ban natural gas imports from Iran and will tighten control over certain exports to Iran including aluminum and steel, computer software and ship-building materials.
The measures come as Iran’s economy continues to reel in the wake of previous Western sanctions targeting the country’s crucial oil exports and access to international banking networks. Iranians are suffering economically amid inflation and the sharp devaluation of the Iranian currency against the dollar.
Shop owners in downtown Tehran said that prices had risen 50% since last month and that they were expecting things to only get worse.
Amir Mosayan, who sells watch batteries wholesale, said that immediately following the sanctions the price of his goods went up 70%.
Eutelsat Communications, one of Europe's leading satellite providers, said Monday that in light of the sanctions it would terminate its contract with IRIB, Iran's broadcast company, and immediately pulled 19 state-owned television and radio channels off the air.
IRIB deputy director Mohammad Sarafraz said Tuesday that Iran would continue airing its programs over other satellites.
Iranian Foreign Ministry spokesman Ramin Mehmanparast called the sanctions “illegal, unwise and inhuman'' but that they would not force the country to retreat from its nuclear program or affect its ability to produce nuclear energy.
His comments underscored the government’s insistence that it can ride out Western economic pressures aimed at reining in its uranium enrichment efforts that Western nations believe are aimed at developing nuclear weaponry. Iran insists its nuclear efforts are for civilian purposes only.
-- Ramin Mostaghim