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On eve of Iran nuclear talks, sanctions bite

Iran is struggling with the financial and economic sanctions imposed by the West in efforts to convince the regime to restrict its nuclear program. More sanctions are in the works.

By Michail VafeiadisCorrespondent / April 13, 2012

Turkey's Foreign Minister Ahmet Davutoglu (left) welcomes Iran's chief negotiator, Saeed Jalili, before their meeting in Istanbul April 13, 2012. Iran on Saturday is due to begin talks in Turkey with six nations over its controversial nuclear program.

Osman Orsal/Reuters

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Iranian officials sit down Saturday with negotiators from six nations to try to iron out the ongoing international dispute over Iran's nuclear activities.

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That Iran is at the negotiating table at all after more than a year of stalemate is testament to the increasing pressure that the West has brought to bear on the regime. Exactly how much the economic sanctions figured in Tehran's decisionmaking is unknown. But it's clear that the increasingly tight financial straitjacket crafted by the United States, the European Union, and their allies is squeezing Iran's already suffering economy.

Iranian banks, for example, are having trouble making international transactions. Last month, the Society for Worldwide International Financial Transfers – a worldwide electronic payment system known as SWIFT – disconnected blacklisted Iranian financial firms from its network. Even non-blacklisted banks are finding it hard to make agreements or transfer money, as the US threatens to blacklist them as well.

Car sales are falling as joint US/European sanctions push prices up, the Detroit Free Press reports.  

Some companies have closed down. "Factories cannot find raw materials and spare parts, and have stopped operating," Karim Pakravan, a DePaul University finance professor, told Voice of America.  "The Iranian market also has been invaded by much cheaper Chinese goods and those will continue to undercut Iranian industry."  

Then there’s the embargo of Iranian oil by European and other nations. As OPEC’s second-largest oil producer with the third-largest oil reserves globally, Iran has a lot to lose if oil sales or production goes down.  A report by the US Energy Information Administration (EIA) released Tuesday said that the present unfavorable investment climate in Iran could curtail the country’s oil output by 15 percent, a decrease of 500,000 barrels per day from 3.55 million last year..

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