Have to hand it to Obama on the Iranian nuclear bomb issue. The GOP approach is to get very aggressive, quite possibly supporting Israel in warmongering against Iran. Obama's approach is superior. He signed a sanctions act and coordinated with all of our allies. Those sanctions have reduced Iranian oil exports by 60% and are all but destroying the value of the Iranian rial. This has caused hyper-inflation in Iran and is destroying businesses and crippling their economy. Achmadenijad is already under pressure from his opponents and he has an election coming up in June. So kudos to Obama. I am saddened that the Iranian people have to bear the brunt of the stupidity of their leaders, but we can't allow Iran to acquire nuclear weapons and Obama is taking a smart approach to applying pressure to create room for negotiation. I prefer this to war, which will be far more devastating for them and us.
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Running battles in Tehran as Iran's currency collapses
DateOctober 4, 2012 - 11:52AM
Robert Tait
Iranian riot police have fought protesters outside Tehran's grand bazaar as popular discontent over the country's economic woes escalates into violence.
Security forces used tear gas and batons against demonstrators angered by a dramatic collapse in the national currency, the rial, which has lost about a third of its value against the US dollar since Sunday. The hour-by-hour decline of the currency provides vivid evidence of the damage wrought by international sanctions, which were imposed over Iran's nuclear program.
Iran is like a rabbit glaring at the headlights of an oncoming juggernaut.
Protesters smashed shop windows and attacked banks after areas of the bazaar filled with moneychangers were closed. Numerous arrests were reported as protests spread out of the bazaar — a symbolic engine-room of the country's economy — into neighbouring areas.
Behind the rial's decline lies a precipitous fall in Iranian oil exports, which have dropped from about 2.5 million barrels per day last year to 1.1 million barrels in August, according to the International Energy Agency.
This has deprived Iran of billions of dollars of revenue and exposed the regime's failure to avoid the damage caused by sanctions.
"There is a perception that Iran is ahead of the game, anticipating what is to come and planning elaborate counter-measures to deal with economic sanctions. This is untrue," said Nigel Kushner, the chief executive of W Legal, a law firm specialising in sanctions compliance.
"My view is Iran is like a rabbit glaring at the headlights of an oncoming juggernaut. It is reacting too late and in a half-hearted manner."
The collapse of the currency reflects a general loss of public confidence. Kaleme, an anti-government website, cited witness accounts that demonstrators demanded the overthrow of Iranian President Mahmoud Ahmadinejad.
The rial is reported to be trading at about 37,500 for one US dollar, compared with 29,500 as recently as Sunday. At the end of last year, Iranians needed only 16,000 rials to buy one dollar.
The clashes came a day after Mr Ahmadinejad blamed the currency's collapse on "psychological warfare" waged by Iran's foreign and domestic "enemies". He denied that his government's policies had anything to do with the decline.
However, the immediate trigger appears to have been an announcement restricting the provision of US dollars by the Central Bank at the official exchange rate for the purchase of essential imports.
Previously, dollars were made available at preferential rates for imports in five key categories. This was reduced to two, apparently spreading fears about a shortage of dollars.
This incident has sharpened the feud between Mr Ahmadinejad and his domestic opponents. Ali Larijani, the speaker of parliament and a possible contender to succeed the president in an election due next June, attributed the rial's decline "80 per cent" to government mismanagement rather than sanctions.
The Kaleme website said that bazaar traders were protesting against economic instability and the regime's "passive approach".
The collapse of the rial makes it far more expensive for Iranian companies to buy imported goods. Mr Kushner said the latest decline "means that most Iranian importers simply cannot afford to pay for goods if they must use the free market rate".
Instead of trading with the West, Iran has tried to buy more goods from countries such as China, India and particularly Turkey. But the fall in the currency raises the price of imports across the board.
"We will see a real financial crisis in the coming months because the economy cannot sustain this," said Mr Kushner. "It is bad, but will become a lot worse."
Read more: smh.com.au |
