Iranian oil sales, foreign exchange taking a hit from US, UN sanctions
Despite Tehran's insistence that increasingly strict sanctions are not harming Iran, Iranian oil sales are down and its foreign exchange access is being hampered by the US and UN sanctions.
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Between 2007 and 2008 alone, as enforcement of unilateral US financial sanctions against Iran's banking system increased, Iran's imports from Asian countries rose by an estimated 109 percent, before undergoing a mild decline in 2009 as oil prices fell due to the global financial crisis, according to International Monetary Fund data.
“The rest of their oil revenues go to other accounts overseas, and access to these reserves is very difficult,” the former official said. “Anywhere besides Asia, Iran is under severe financial constraints.” Iran's economic stability has widespread implications for the Middle East and beyond. The country is the world's fourth largest oil producer and the Organization of Petroleum Exporting Countries' second-largest oil exporter after Saudi Arabia.
The Islamic Republic's domestic political disputes and economic concerns directly impact Tehran's foreign policy and the effectiveness of US and United Nations sanctions against the regime.
Washington, to date, has pursued a carrot-and-stick approach with the Islamic Republic over its controversial nuclear program, combining harsh economic sanctions with diplomatic outreach.
Ahmadinejad and a strong rial
Money exchange dealers who work with Iran's Central Bank to facilitate monetary policy have said in interviews that keeping the national currency around or below 10,000 rials per dollar is considered a national security priority for the Iranian government.
A boost to the rial would be a boon for Mr. Ahmadinejad, whose administration is expected to face stiff competition amongst members of Iran's political elite, including former conservative allies, in the run-up to the country's parliamentary elections next March.
Any headway Ahmadinejad manages to achieve in his international political standing translates into a rise in his administration's popularity on the Iranian street, where improved relations with the US is highly regarded.
A strengthened rial-dollar exchange rate in the wake of considerable economic and international political pressure against the Islamic Republic will help fortify any increase in public approval Ahmadinejad manages to gain. “The president wants a strong rial as a sign of strength,” says the Tehran-based analyst.