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Iran angry over EU unity on oil embargo

Iran's currency nosedived today as the EU approved an oil embargo to take effect in July. The rial has lost half its value since October.

By Staff writer / January 23, 2012

A money changer holds Iranian rial banknotes as he waits for customers in Tehran's business district January 7.

Raheb Homavandi/REUTERS

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Istanbul, Turkey

Iran reacted angrily today to a new European Union ban on oil imports and other sanctions that are the latest measures aimed at forcing Iran to curb its nuclear program.

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While Iranian generals and politicians alike have put a brave face on the impact of the long-expected sanctions – with some renewing vows today that Iran would cut off strategic oil shipping channels through the Strait of Hormuz – Iran's currency continued its nosedive against the dollar on expectations of deepening crisis.

"The most telling sign is panic at the gold and foreign exchange markets," says an Iranian analyst in Tehran who closely follows the economy and asked not to be named.

The rial reached an all-time low today at 21,000 rials to the dollar; it has lost half its value in just under three months. Many Iranians are hoarding gold.

A US aircraft carrier group, joined by British and French warships, entered the Persian Gulf through the Strait of Hormuz on Sunday, defying a recent Iranian warning to keep out of the narrow waterway through which one-third of the global seaborne oil supply is shipped.

Iran shocked by EU unity

Iranian officials have been shocked by the display of European unity, considering that Iran accounts for 20 percent of oil imports to Europe. The oil measure will only fully take effect on July 1, to give key buyers – especially Greece and Italy, which are facing debt crises – time to find alternative sources.

The unprecedented EU measures are the latest to be imposed upon Iran, in addition to four rounds of sanctions from the United Nations Security Council and a raft of American measures.

Iran says it will not slow or suspend any part of its nuclear program when under pressure. Few expect sanctions alone to prompt Iran to capitulate on its nuclear program, which Tehran says is for producing nuclear energy, not bombs.

"There is a genuine fear here that once the West senses weakness, it won't stop at the nuclear dossier," says the Iranian analyst. "The threat of regime change is also increasing.... I think the Iranians think: 'Well, if I was in their [Western] shoes, why stop here?'"

Iranian official: Stop oil exports immediately

American and Israeli intelligence, along with inspectors of the UN's International Atomic Energy Agency, conclude that Iran has conducted weapons-related work in the past, but say they have no evidence that Iran has decided to make a nuclear device.

Iran and world powers are considering resuming nuclear talks that broke off a year ago in Istanbul, but neither an agenda nor dates have been agreed.

"I want the pressure of these sanctions to result in negotiations," EU foreign policy chief Catherine Ashton said. "I want to see Iran come back to the table and either pick up all the ideas that we left on the table ... last year ... or to come forward with its own ideas."

A senior Iranian politician said today that Iran should fight EU pressure by immediately closing off its oil taps to Europe, to disrupt European efforts to find alternatives.

"The best way is to stop exporting oil ourselves before the end of this six months and before the implementation of the plan," Ali Fallahian, a member of Iran's Assembly of Experts and former intelligence minister, was quoted as saying by Fars news.

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