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Chicken Bans, Bank Runs And Ramadan - Sanctions Start To Squeeze Iran

Chicken Bans, Bank Runs And Ramadan - Sanctions Start To Squeeze Iran
Christophe Ayad with Assal Reza

In Iran, the shortage of poultry has become the symbol of the economic "war" imposed on the Iranian regime by the West to pressure the country into abandoning its nuclear program.

Since a new round of European and American-led economic sanctions were enforced on July 1, the price of chicken has soared in Iran, rising from 3,000 tomans ($1.70) to 9,000 tomans ($4.90).

On July 23, an uprising broke out in the northwestern town of Nishapour to protest against the shortages and skyrocketing price of poultry. Across the country, endless lines have formed outside shops selling state-subsidized chicken at the cost of 4,700 tomans.

Discontent is so prevalent that the head of the national police, Esmaïl Ahmadi Moghadam has called for national television to stop broadcasting images that show people eating chicken.

At the same time, the state is attempting to coax the bearers of bad news: journalists. In the northern region of Gilan, the government has decided to offer journalists the possibility of buying chicken at a discounted rate just by showing their press credentials.

During the period of Ramadan, the Iranian authorities are keeping an especially close eye on the public. The Minister of Culture and Islamic Guidance Mohammad Husseini has also recommended that the media should "not exaggerate" the economic problems and "should not relay stories from the foreign press."

"The West is trying to create a divide between the people and the government," exclaims Yadollah Javani, an advisor to the Supreme Leader Ali Khamenei.

On first thought, it seems difficult to make a link between the price of chicken and sanctions that were supposed to target the military-industrial complex, linked with nuclear activity. In fact, it seems that the devaluation of the Iranian currency (40% since February on the black market) has made the import of grain more expensive. Yet, this economic crash is an indirect consequence from sanctions aimed at the entire Iranian banking system, the central bank included, as well as its foreign partners.

"There hasn't been this large an effort to isolate a country from the rest of the world since the boycotts against South Africa during the apartheid," explains Iranian-born French lawyer Henri N. Zoleyn.

Based in Dubai, Zoleyn specializes in business, and is particularly well placed to observe the effects of the strict American-led sanctions. For him, the attack is going well beyond the parameters of the fight against the nuclear program. It's a massive effort, aimed at systematically crushing the country financially.

There are dozens of examples: a wealthy Iranian client living abroad, whom HSBC bank called a few weeks ago to inform that she had two weeks to withdraw the million dollars she had in the bank before the her account would be closed; or the Iranian businessman based in Dubai, arrested in November 2011 at Prague airport for having sent four screws to be used in the aeronautics industry to his country by DHL. He is still in custody.

American visitors

The sanctions are also affecting businesses that export products abroad, such as dates, rugs or pistachios. In all these cases, the problem remains the same: it is impossible to transfer money in or out of Iran through the banking system.

"Not a week goes by where a U.S. Treasury representative doesn't come to Dubai to encourage bank directors, insurance companies or foreign companies to cut off all ties with Iran," says one diplomatic source.

Pressure from the Americans is particularly effective. U.S. President Barack Obama has just tightened the noose a little more this week by adopting new measures targeting the Iranian oil industry. Moreover, the U.S. Treasury has banned Iraqi bank, Elag Islamic Bank, as well as Chinese bank Kunlun from having access to the American financial sector for having aided transactions of millions of dollars from Iranian banks.

The U.S. Congress fired another salvo last Wednesday by adopting a law that targets every person or company working with Iranian natural gas, oil or uranium companies.

Iranian authorities seem to be ambivalent about which action to take: sometimes spurring on national patriotism, while other times trying to minimize the effects of sanctions so as to not to seem weak. The Supreme Leader Ali Khamenei advocated last week an "economy of resistance" at a meeting with chief executives.

Director of Iran’s central bank Mahmoud Bahmani used equally belligerent rhetoric: "Like in military combat where guerrilla techniques are used, we have to consider an economic war to make these sanctions fail."

With the implementation of the European oil embargo and the growing difficulties for major consumers of Iranian oil (China, India, Turkey, South Africa, Japan, South Korea), gross exports could fall by 40 percent in 2012, representing more than 80% of earnings by the Iranian state.

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