As EU tightens the screws, Iran looks toward China (VIDEO)
China and Russia could gain significant leverage over Iran as mounting EU sanctions cause it to begin looking for business elsewhere.
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The Islamic Republic has become increasingly isolated internationally since last month, after Washington claimed to have discovered a plot by several members of Iran's Quds Force to assassinate Saudi Arabia's ambassador to the US on American soil.Skip to next paragraph
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In November, the US imposed a new round of sanctions, primarily on Iran's petrochemical sector, and the United Kingdom announced unprecedented sanctions against Iran's central bank, cutting off all financial dealings between British and Iranian banks. US Congressmen have also threatened to sanction Iran's central bank, which acts as a clearinghouse for nearly all oil and gas transactions with foreign countries.
After Tuesday's attack on the British Embassy in Tehran, Iran's Central Bank temporarily closed the local currency exchange market for fear of any blowback that could result from citizens rushing to buy foreign currency as a haven against Iran's currency, the rial, in the wake of Iran's worsening political relations with Europe.
"Iran is teetering on the border of serious inflation," says the Tehran-based analyst. "Anything that can push inflation up, including any major changes in the exchange rate, is worrisome.”
Conservative factions jockey ahead of March vote
The storming of the British embassy highlights an ever-deepening rift between Iran's conservative political factions, with infighting becoming increasingly combative in the run-up to Iran's March 2012 parliamentary elections.
Ahmadinejad's administration is expected to face strong competition from conservatives – including former political allies – vying for parliamentary seats. As the elections approach, key political players are likely to capitalize on the nationalistic sentiments that sparked the anti-British protests, in an effort to gain favor from conservative voters.
It is still unclear which faction within Iran's political elite may have orchestrated the protests and subsequent attacks on the British embassy compounds. Iran's foreign ministry was quick to criticize and express regret for the attack on the British embassy, calling it “unacceptable,” while many traditional conservatives, including speaker of parliament Ali Larijani, lauded the protesters' storming of the British embassy, calling the act a “normal” reaction to years of anti-Iranian British policies.
At the same time, the state IRNA-news agency, whose chief is a close ally of Ahmadinejad, provided ample media coverage of the attacks, while state Islamic Republic of Iran Broadcasting, which is controlled by the office of Supreme Leader Ayatollah Ali Khamenei, downplayed them.
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