Iran’s rial lost value against the dollar and gold on Wednesday on the news of the failed talks and anticipation of U.S. sanctions on firms doing business with Iran’s central bank beginning June 28 and a European embargo on Iran’s oil exports set to take effect July 1. Iran, struggling with a growing budget deficit, is offering price reductions for its oil to retain customers.
On a recent road trip through Iran, New York Times columnist Nick Kristof also noted that sanctions are taking a bite out of the U.S. economy. “To be blunt,” he wrote on Sunday, “sanctions are succeeding as intended: They are inflicting prodigious economic pain on Iranians and are generating discontent.” Kristof talked with factory owners who can’t get mechanical equipment because of the sanctions, and shoe sellers whose sales fell by two-thirds. Noting that “sanctions are hurting ordinary Iranians more than senior officials” yet not seeing other paths for pressure, Kristof also added:
Western sanctions have succeeded in another way: Most blame for economic distress is directed at Iran’s own leaders, and discontent appears to be growing with the entire political system.
In another story reported from Iran, the New Yorker’s Laura Secor observed, despite her assignment to cover the elections, how sanctions are compounding pre-existing economic problems there. She noted the economic distress and the great pains the Iranian government goes to in order to paper over the problems because either they take the blame for mismanaging the economy, or they have to admit that Western powers’ pressure campaign is having an effect. Secor summed up the economic situation:
In the twelve months preceding my visit, Iran’s currency had lost half its value. … The day before the election, Tehran residents were complaining about the price of chicken, which had just leaped to forty-five thousand rials, or four dollars, per kilo—triple the 2008 price. In the past year, the cost of rice had jumped twenty-eight per cent, and vegetables a staggering hundred and forty-six per cent. Even when you wanted to talk to Iranians about politics, they turned the topic back to inflation.
In perhaps the best sign that sanctions are compounding Iran’s economic woes, the Iranian authorities, who interrogated Secor before she left, were very nervous about her reporting about the economy.