Iranians rich and poor caught in sanctions net

Jul 6, 2011, 6:10 a.m.

"I am worried all the time about not being able to pay my rent."

Sanctions have a strong psychological impact on ordinary people, who blame them for higher inflation.

Hamid Ghabadi, owner of a tile factory, said he can't pay his workers any more.

"I had to lay off at least 200 employees because of the increasing costs," he said.

Sanctions on banks have made it more difficult for businessmen to finance deals and get letters of credit.

"My business is not going well because of sanctions. Trade transactions in foreign currencies have become very difficult if not impossible," said Reza Mirzai, head of an export company.

A growing number of trading houses and other international firms have stopped doing business with Iran. Many international banks refuse to open accounts for Iranians and have frozen accounts belonging to dozens of Iran-linked firms.

In 2008, a French bank closed Iranian housewife Mitra Sami's account of 20 years, saying it was "suspending business with Iran and parties in the country."

"They gave me one month notice before closing the account," she said. "I have no credit cards now."


Many conservatives who backed Ahmadinejad's disputed 2009 re-election are nevertheless blaming sanctions on his harsh anti-Western rhetoric and also criticize his economic policies.

Media have carried reports of workers walking out of government-owned factories because they have not been paid for months. Unemployment is officially around 10 percent, but critics put it closer to 15 percent.

The sanctions are also having an impact on Iran's rial currency which has fluctuated in value in recent months. In an apparent bid to maintain foreign currency reserves, Iranian banks have imposed limitations on selling dollars and euros.

The Central Bank devalued the rial by almost 11 percent in early June and has announced a raft of other measures to prop up the currency including restrictions on sales of foreign cash.

Some politicians and influential clerics have warned the government over economic hardship and the specter of further sanctions, which they fear could revive anti-government protests that jolted the country in 2009.

A power struggle among hardline rulers, including clerics wary of being sidelined by Ahmadinejad, has deepened since April when Iran's most powerful authority Supreme Leader Ayatollah Ali Khamenei confronted the president publicly.

But the ruling establishment may paper over the cracks rather than risk fatal damage to its grip on power, analysts say, doubting that the deepening tension could imperil Ahmadinejad's chances of serving out his term until 2013.

(Editing by Richard Meares)

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