TEHRAN - Sanctions drawn up by the European Union to dissuade Iran from building a nuclear weapon should considerably hamper a country already suffering from previous economic measures imposed by the West, analysts said.
An immediate ban on oil imports and of assets owned by Iran’s central bank would undoubtedly complicate matters albeit “without fundamentally changing the situation Iran is already facing since financial sanctions were imposed by the West in 2010,” a European economic analyst in Tehran said.
Europe buys only about 20 percent of Iran’s oil and authorities in Tehran say they are confident they will continue selling the country’s output throughout the world.
Iran’s main overseas clients — China, India and Japan — said they will continue to import Iranian oil which should “limit the impact of the European decision” a Western oil expert said.
But the Islamic republic did warn Saudi Arabia recently that any cut to world supply caused by the sanctions should not be compensated by a boost in output from the kingdom, which shows “a certain nervousness by the Iranians,” a European diplomat said.
But oil experts said Iran is pretty much self-sufficient in most oil derivatives, including gas at the pump and chemicals.
Where the sanctions do bite is in the country’s finances, especially in its holdings of foreign currencies, according to several diplomats and economic analysts in Tehran.
Iran’s import flows have decreased significantly because of the sanctions on its financial system that have also complicated Iran’s trade operations as well as its ability to repatriate $100 billion in oil proceeds sitting in international bank accounts.
And without the dollars, Iran is unable to prop up its long overvalued local currency, the rial, pushing the central bank this week to suspend the free exchange of foreign currencies and to impose two artificial ceilings on exchange rates.
With fixed rates now imposed on both businesses and individuals, a black market for currencies has exploded into action, observers said, fuelled also by a new limit on acquiring foreign currency equivalent to $1,000 per person, per year for persons travelling abroad.
Import businesses have also seen foreign cash almost vanish.
“The central bank can no longer provide currency which is severely affecting our imports,” said an executive at a subsidiary of a major European firm in Tehran.
“New Western sanctions against the central bank ... will especially tighten the financial noose on Iran,” said a local economist who requested anonymity. “It will increase risks of disorganisation in the economy, and restrain Iran’s capacity to invest in oil and gas resources even further,” he added.
The Islamic republic, which is already under four rounds of United Nations sanctions, vehemently denies its nuclear programme masks an atomic weapons drive as the West alleges, and insists it is for civilian purposes only.