Iran reportedly bans imports of foreign 'luxury' goods

Iran reportedly bans imports of foreign 'luxury' goods

Iran is reportedly banning the import of foreign cars, laptops and scores of other "luxury" goods in an effort to protect its stash of hard currency.

Iran Daily, a state-owned newspaper, reported Thursday that a long list of foreign products including cellphones and cosmetics could not be purchased from abroad. More than 70 kinds of foreign goods were included on its published list, including home appliances, apparel and luxury cars such as Porsches.

Products that could not be made domestically could later be removed from the list after more review, the article said, but those that could be produced inside Iran would remain banned.

The step comes as Iran faces continued pressure from Western sanctions over its disputed nuclear program. The value of Iranian currency has plunged dramatically over the last year, forcing Iranians to scale back. Western government experts believe its foreign currency reserves are in danger of running out, pushing it toward an “economic drop dead date.”

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Diplomat: Western officials see Iran's economy imploding quickly

Mahmoud Ahmadinejad
WASHINGTON -- Western governments believe that Iran’s economy is imploding so quickly that it could essentially collapse next spring under the combined pressure of international sanctions, an oil embargo and internal mismanagement by officials in Tehran, said a European diplomat here.

Western government experts estimate that Iran will run out of foreign exchange reserves in six months to a year, making it impossible for the Islamic Republic to sell products abroad and buy the imports it needs to continue its manufacturing sector and run public services, the European diplomat said.

Western governments have steadily tightened economic sanctions on Iran this year in the hope of crippling trade and setting off an economic crisis that will force leaders in Tehran to curb or abandon a nuclear program that the West fears is aimed at building a nuclear bomb. Tehran has remained defiant, insisting it is enriching uranium for peaceful purposes. Western officials believe that a full-scale balance-of-payments crisis could spark domestic unrest and threaten the regime’s survival.

The European Union this week added new sanctions on Iran’s energy, financial and natural resources sectors, moves likely to further drain Iran’s foreign currency reserves and accelerate the plunge in the value of its currency, the rial.

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EU imposes new sanctions on Iran, Syria

The European Union imposed new sanctions on Iran and Syria. The EU says the new restrictions are warranted because of Iran's continued lack of cooperation over inspection of its nuclear program and Syria's violent crackdown on rebels
LONDON -- The European Union on Monday slapped tough new sanctions on Iran out of "serious and deepening concerns" over Tehran's pursuit of its nuclear program.

All transactions between European and Iranian banks are to be prohibited, except those with advance official permission or for humanitarian purposes. Imports of natural gas from Iran will be banned. The EU is also tightening control over exports to Iran of certain goods, including metals such as aluminum and steel, computer software and shipbuilding materials.

EU foreign ministers said the new restrictions were warranted because Tehran continues to block inspectors of the International Atomic Energy Agency from making a full assessment of Iranian nuclear facilities and capabilities.

"Iran is acting in flagrant violation of its international obligations and continues to refuse to fully cooperate with the IAEA," the EU ministers said in a joint statement. "Today's decisions [on sanctions] target Iran's nuclear and ballistic program and the revenues of the Iranian government for these programs. ... The sanctions are not aimed at the Iranian people."

The EU said it would freeze the assets of 34 companies and institutions, mostly in the energy and financial sectors, that provide support to the Tehran regime.

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Turkish leader says flight to Syria carried ammunition

Turkish leader says flight to Syria carried ammunitionBEIRUT -- A Syrian plane intercepted and forced to land in Turkey was carrying Russian ammunition as well as previously reported military communications equipment, Turkish Prime Minister Recep Tayyip Erdogan told reporters Thursday.

The passenger plane, which was coming from Moscow, was held on the ground for several hours Wednesday as Turkish authorities searched the plane and seized 10 boxes before allowing the flight to continue to Damascus, the Syrian capital. Its cargo apparently was destined for Syria as well.

Erdogan said Turkey was still examining the equipment, the Associated Press reported.

Syria has denied the plane, a Syrian Air Airbus A320, was carrying any weapons or prohibited goods.

Turkey said it had intercepted the plane based on national and international rules and regulations.

"The cargo was not suitable for a civil plane under international rules and regulations,” said Transportation Minister Binali Yildirim, the official Anadolu news agency reported. "An air space must be utilized for peaceful purposes. Otherwise, we will use our rights stemming from national and international laws. We used the rights on Wednesday and will use them in the future whenever necessary.”

The incident comes amid increasing tension between the two countries as Turkey has traded mortar fire with Syria in recent days, a week after a Syrian shell killed five people across the border. Turkey’s top military commander warned Wednesday that his country would respond forcefully to any further shelling of its territory.

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--Times staff writer

Photo: Turkish Prime Minister Recep Tayyip Erdogan speaks during a news conference in Ankara, Turkey, on Thursday. Credit: Associated Press


Sanctions, currency chaos igniting unrest in outcast Iran

An Iranian shopper pays a fruit seller with 50,000-rial banknotes
Soaring prices at Tehran's cavernous Grand Bazaar have ignited violence this week as money traders and vendors clashed with riot police over the plummeting value of the Iranian currency, which is being gutted by international sanctions and mismanagement by the Islamic regime.

GlobalFocusWhat for most Iranians has been an abstract political dispute between their leaders and Western countries concerned about Tehran's nuclear ambitions has suddenly hit them in their wallets and pushed them to lash out. The rial has lost 80% of its value against the U.S. dollar in the last year, a decline accelerated by tightened U.S. and European Union sanctions now depriving the regime of half the hard currency it was earning from oil exports.

Iranian President Mahmoud Ahmadinejad blamed the deepening economic chaos on foreign enemies, contending there is "no economic justification" for the public scramble to dump rials in favor of dollars, euros and gold. Supreme leader Ayatollah Ali Khamenei also struck a defiant pose, reasserting Tehran's right to enrich uranium and vowing that Iranians "will never surrender to pressure."

But Iranian exiles and scholars see the angry outbursts in the marketplace as a sign that ordinary Iranians are finally fed up with a regime that has brought them isolation, insecurity and eroding living standards. They see a population, resentful of a crackdown on dissent three years ago, now edging toward rebellion.

The unrest also demonstrates that the U.S. policy of letting sanctions and diplomacy undermine popular support for the regime is having the desired effect, confronting Tehran with its gravest challenge since Islamic clerics came to power in a  1979 revolution, the experts say.

The street value of the rial has dropped by half in the last two months and plunged 18% on Monday alone. The unofficial exchange rate for the dollar -- more than 35,000 before back-alley trading halted -- is almost three times the official rate of 12,260. But that subsidized exchange rate is available only from state banks to a limited and shrinking number of key importers.

Money traders stopped selling dollars Tuesday, confused over how to price the swiftly deteriorating rial. Some vendors closed their shops in protest of the government's failure to intervene and prop up the currency; others boosted prices beyond what many shoppers can or will pay.  

Before harsher sanctions kicked in three months ago, Iran's government had been using a sizable share of its $100-billion annual oil earnings to subsidize dollar-denominated food and consumer goods, to keep prices stable and placate the population, said Abbas Milani, a Tehran-born academic who directs Iranian studies at Stanford University.

Milani said he suspects the government was initially using the economic downturn brought on by the sanctions to put an end to the costly dollar subsidies. But he now concludes that the regime has been forced to let the rial tumble because it has run out of the hard currency needed to stop the slide.

Riot police block Tehran's Grand Bazaar"We're not talking about a billion dollars or 2 billion to stabilize a currency that has gone down so far. The government would have to find enormous sums of money to pour in, and if they had it they would have done it by now," Milani said.

"I don't think the regime can survive this one," he said, unless Khamenei does the unthinkable and meets Western demands that Iran cease enriching uranium beyond levels needed for civilian nuclear programs.

Tehran officials recently told the International Monetary Fund that they had $50 billion on hand, enough to see Iran through the sanctions bite for at least four or five months, Milani said. He calculates that the regime should have saved about $300 billion in a rainy-day fund over the last eight years. That no intervention in the currency crisis has been forthcoming tells him that much of the oil windfall has been squandered or siphoned off into private accounts of the Revolutionary Guards and government leaders.

"Social and political cohesion in Iran will be deeply disturbed by this economic crisis," predicted Alireza Nader, senior policy analyst on Iran for Rand Corp. "And it's not just the economic crisis -- you saw Iranians take to the streets in 2009 for a number of reasons, and those tensions have been simmering below the surface. We see them coming up now."

Nader pointed out that protesters at the bazaar this week have shouted denunciation of the regime's politics as well as soaring inflation. Shouts of "Leave Syria alone and think about us!" could be heard in clandestinely shot video footage of the angry crowds, he said.

 The Iranian government has been the sole regional supporter of Syrian President Bashar Assad and his brutal suppression of a rebellion now in its 19th month.

"Eventually this is going to put enormous pressure on the Iranian government to concede on a number of issues, not just the nuclear programs but domestic political issues as well," Nader said. "It's already gotten to the point where people's livelihoods are at stake and they're not going to tolerate that situation. We can definitely expect to see more unrest in the coming months."

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Follow Carol J. Williams at www.twitter.com/cjwilliamslat

Photo: An Iranian shopper on Wednesday pays a fruit seller at the Grand Bazaar in Tehran with 50,000-rial banknotes. The sanctions-battered Iranian currency has lost 80% of its value in the last year, spurring inflation and social unrest. Credit: Abedin Taherkenareh / European Pressphoto Agency

Insert: Riot police block an approach to the Grand Bazaar on Wednesday after arresting money traders and dousing fires lighted in protest of the falling rial currency. Credit: European Pressphoto Agency


Iranian police patrol tense Tehran bazaar in wake of protests

TEHRAN -- In the wake of demonstrations in Tehran over surging prices and the plunging value of Iran's  currency, police patrolled the city's central bazaar Thursday as many shops remained shuttered in silent protest.

Tehran's massive traditional marketplace in effect was shut down Wednesday as shops closed their doors and merchants joined in angry demonstrations over their economic woes. Carpet sellers reopened their shops Thursday and tried to woo customers, but more than a third of shops still appeared to be closed, though shoppers continued to stream by.

Gold and cloth markets were closed. Some jewelry shops were open, but had failed to set up their  window displays, leaving gold wares inside their safes instead of arraying them to lure customers. The deeper that shoppers strolled into the labyrinth of the bazaar, the fewer shops were open.

“We wholesalers don’t know what to do. The cost of the raw material increases. Retailers can’t buy from us as before, because we have to increase our prices too,” said Ebrahim, a clothing wholesaler who didn't want to give his last name to foreign media. His store was shuttered most of the day.

The unusual outburst of protests Wednesday came after the latest drop in the value of the rial, which has tumbled as much as 80% in the last year as Iran has been squeezed by international economic sanctions. As Iranians have bought up foreign currency, anxious about the fate of the rial, its value has only fallen further.

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Iranian currency plunges to record low against the dollar

Rial

TEHRAN -- The Iranian currency plunged to a record low Monday, plummeting to a street value of 32,500 rial to the dollar, according to exchange tracking websites.

The dramatic numbers were censored and disappeared from websites minutes after they were posted Monday. Yet the news was also relayed through the semi-official Mehr News Agency, which reported the rial was trading at an only slightly better rate of 32,300 to the dollar.

The newest numbers revealed a stunning drop in just a few days: The rial had been selling for 26,900 per dollar on the Tehran black market as of Thursday. But the trend is nothing new. Over the past nine months, the rial has tumbled more than 70% in value, driving up inflation and making food more costly.

The plunge is another sign of the economic unease in Iran as it grapples with economic sanctions that have tightened in the past year. Western powers, unconvinced by Iranian insistence that its nuclear program is solely for peaceful purposes, have ratcheted up pressure to try to curb its uranium enrichment efforts.

The unease has apparently spurred Iranians to buy up dollars and other foreign currency. Though the Iranian central bank sets an official trading rate of 12,260 rials to the dollar, the street value of the rial is far lower.

As Iranians continued to be pinched financially, the economic strain could have political repercussions. A recent Israeli Foreign Ministry report, reported by Haaretz, found Iranians blamed their government for the surging cost of bread, meat and electricity caused by Western sanctions.

“As long as there is no reconciliation with the U.S. administration and sanctions prevail, the devaluation of the rial will continue,”  said Asghar, a 40-year-old who owns a currency exchange shop south of the British Embassy in Tehran.  

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-- Ramin Mostaghim in Tehran and Emily Alpert in Los Angeles

Photo: An Iranian woman displays a new 50,000 rial banknote released by the Central Bank of Iran in Tehran on March 12, 2007. Credit: Hasan Sarbakhshian / Associated Press


U.S.-led sanctions having impact in Iran, Israeli report says

Israel says sanctions having impact in Iran

JERUSALEM -- While Israeli Prime Minister Benjamin Netanyahu has pushed for the United States to take a harder line to stop Iran from getting a nuclear weapon, an Israeli government report says existing measures have had an impact inside Iran, a less pessimistic take on the results of U.S.-led sanctions.

An internal review by Israel’s Foreign Ministry, reported Thursday by Haaretz newspaper, found that resentment and frustration is building among the Iranian public.

The review found that Iranians are blaming their government for rising prices on bread, meat and electricity, caused by Western sanctions against Iran’s oil industry and central bank.

Israeli Foreign Minister Avigdor Lieberman said this week the rising pressure was threatening to destabilize the Iranian regime. “There is more and more domestic resentment there," he said. “The Iranian leadership is also feeling this and is therefore escalating its rhetoric.”

Others inside Netanyahu's Likud Party agree the international pressure and U.S. threats to take military action against Iran are working to intimidate the regime.

“The good news is that they haven’t broken out to build a weapon yet," said Intelligence Minister Dan Meridor, adding that he did not believe the Iranian government would do so because “they understand what it means.”

Meanwhile, Israeli citizens remain anxious about a possible regional war that some fear could result from an Israeli military strike against Iran’s nuclear program. A Tel Aviv University survey this week found that half of Israelis fear for their nation's existence if war with Iran were to break out.

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Photo: A visitor looks at portraits of Iran's President Mahmoud Ahmadinejad, left, and Israel's Prime Minister Benjamin Netanyahu during the exhibition "Faces of Power" by Greek photographer Platon Antoniou in Cologne, Germany. Credit: Martin Meissner / Associated Press


World of woe, little hope of relief, await U.N. General Assembly

General Assembly session on Syria in August
When 120 world leaders and their entourages gather at the United Nations this week, the woes of the world will be onstage in all their tragic detail: a civil war in Syria, the threat of a nuclear-armed Iran, reignited ethnic conflicts in Africa and uphill battles against poverty and global warming.

GlobalFocusWhat is likely to be in short supply at the General Assembly are fresh ideas for resolving the kaleidoscope of crises afflicting the planet. The U.N. Security Council has been hamstrung by internal conflicts among its permanent members in devising effective intervention in the Syrian bloodletting, and a colossal conference on sustainable development hosted by the world body three months ago was widely viewed as unproductive.

The Middle East and its myriad security challenges are expected to dominate the marathon of speeches beginning Tuesday, especially against the backdrop of worldwide Muslim outrage over an amateur video made by U.S.-based Christian zealots depicting the Prophet Muhammad as vile and sadistic.

Violent protests over the 14-minute film clip flared earlier this month after a version of "The Innocence of Muslims" was dubbed into Arabic and posted on YouTube. Conservative Islamists, some backed by Al Qaeda-aligned holy warriors, have attacked U.S. and other Western embassies and businesses across the Islamic crescent spanning the Middle East, Africa and South Asia. In the worst of the violence on Sept. 11, the U.S. ambassador to Libya, J. Christopher Stevens, was killed along with three other Americans at the consulate in Benghazi. On Friday, the Muslim sabbath, enraged demonstrators clashed with police in Pakistan, killing at least 18 people.

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Iranians fret and lawmakers demand answers as rial plunges

Iran-currency

TEHRAN -- Homayoun Hashemi had imagined visiting his daughter, off studying in the United States. But as the value of the Iranian rial plunges, that trip is steadily slipping out of his reach.

“Now my wife and I are almost forbidden to go visit our daughter,” the 60-year-old engineer lamented. “The trip is not affordable.”

As Iran is pressed by Western sanctions over its disputed nuclear program, the beleaguered economy is putting added pressure on ordinary Iranians through inflation and triggering pleas for the Iranian central bank to step in.

Iranian media reported Tuesday that the economic minister was summoned to a closed session of parliament to explain why the currency had dropped so dramatically, plunging in value compared with the U.S. dollar by roughly half in a year. One lawmaker accused the central bank of cutting off the flow of dollars to Iranian traders in recent weeks, making "the biggest mistake in history," Reuters reported.

Outside of government halls, the tumbling rial has Iranians changing their plans. For Nima, a 25-year-old with a British engineering degree, it means downgrading her dreams of seeking another degree abroad in management, perhaps in Canada or the United States, to daydreams.

The price would be “neck breaking,” she complained. “All my educational ambitions vanished in thin air thanks to the local currency depreciation.”

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