There is a limit to Iran’s anti-American stance as the almighty dollar replaces the local “rial” currency at the Tehran Grand Bazaar, according to the Islamic Republic’s Mehr news agency.
The government is searching for a non-American alternative, while the public is happy to take dollars. One wholesaler said he is demanding greenbacks instead of the rial, and many sellers have switched to the dollar. The rial suffers from 25 percent devaluation since President Barack Obama imposed harsher sanctions on countries dealing with Iran.
The Obama administration is anxious to convince Israel that punishing sanctions will make it unnecessary to attack Iran to stop its unsupervised race to nuclear capability.
Sanctions have limited the ability of countries to use banks to pay in dollars for oil, and the Islamic Republic, which considers the United States to be the symbol of everything that is evil, is accepting gold. “If a country should so choose, it can pay in gold and we would accept that without any reservation,” central bank governor Mahmoud Bahmani said.
However, it would take more than half of the world’s supply of gold to pay for Iranian oil exports.
One alternative is the old-fashioned barter system. China is paying for some of its oil by reducing its foreign debt to Iran, while others are paying for oil with wheat in order to get around the problem of funneling dollars through banks that are under U.S. sanctions.
As President Barack Obama prepares to receive Prime Minister Binyamin Netanyahu in Washington, the United States last week forced a major Dubai bank to stop dealing with Iran. The move is highly significant because the Noor Islamic bank is partly owned by the local Dubai government.
The U.S. Treasury Department believes that the bank is a principal vehicle used by Iran to process transactions in order to evade sanctions, according to The Wall Street Journal. It pointed out that the bank’s chairman is the son of Dubai’s ruling sheikh.
Dubai is an ally of the United States and, like other Gulf State countries, does not want Iran to become a nuclear power, but it also enjoys healthy revenues by dealing with Iran.
Iran is estimated to have collected more than $80 billion from oil exports last year. Disrupting its ability to conclude transactions affects its finances as inflation spirals.
The next step by the United States to inflict Iran with harsher sanctions could be placing sanctions on foreign banks that deal with blacklisted Iranian companies. The Noor bank almost was sanctioned by the United States last year after the U.S. Treasury realized it was handling transactions for Iran.
The bank backed off after receiving warnings, the Journal reported.
Another suspect bank is the Turkey-owned Halkbank, which has admitted it may have to stop trading with Iran in order to avoid U.S. sanctions against it.
Sanctions were not successful in toppling Iraq’s Saddam Hussein, and while they have damaged Iran, the lack of universal participation has made it easier for Iran to survive.
Many analysts have said that sanctions won’t convince Iran to halt its unsupervised nuclear program because many Asian countries are not joining the American effort.
The sanctions definitely are affecting Iranians, but the question remains how much the economy can withstand before falling apart and causing local opposition to the regime to be felt.
“It seems clear that sanctions are going to take time to work, if at all, and that they are unlikely to have any impact within the timeframe suggested as being most propitious for any Israeli (or Israeli-US) military strike,” wrote Bruce Loudon of the Australian on Saturday,.