DAR AL ISLAM - IRAN: AN ECONOMY ON THE VERGE OF COLLAPSE?!?

Sanctions disrupt the economy

Rome, 15 Nov. (AKI) - Iran's hardline president Mahmoud Ahmadinejad continues to call the United Nations sanctions 'worthless scrap paper'. Iran's economy and finance minister Davoud Danesh Jaafari calls for the "defeat of financial terrorism and those who want to bring Iran to its knees." But economic experts reject these claims as "pure propaganda".

Less than a year after the sanctions were introduced, Iran's banks and major industries are already on the point of collapse, inflation and unemployment is rampant, while foreign capital has dried up and Iranian capital is pouring into Dubai and other countries in the region.

Iran's international financial institutions such as Swiss and German banks have been the first to sever ties with Iran, followed by smaller banks in Malaysia and Singapore, Dutch, French and Italian banks. Many of these have also closed accounts owned by Iranian citizens.

Italy's export credit agency Sace has stopped guaranteeing credit to firms intending to operate in Iran - which the agency now rates at 6 on its scale of risk running from 1-7.

"My paper is no able to send me money in Tehran owing to Dutch banks' refusal to have commercial dealings with Iran's financial institutions," Thomas Erdbrink, a correspondent in Tehran for the Dutch daily NRC wrote.

"It's not always possible to use international credit cards, owing to the US embargo in place since 1979.

"And making purchases on the Internet is impossible if the purchaser is in Iran, in that every form of sale to those living there is banned."

"People living in Iran are not allowed to register for an email account on Yahoo's website and cannot even use Skype if they are living in Tehran," Erdbrink said.

He said he now has to fly to Dubai every time he wants to carry out a banking operation and has to travel to the Dutch capital to draw his salary.

A western diplomat living in Tehran confirmed Iran's financial isolation, telling AKI: "One of our embassy staff has to travel to Europe each month and return with a suitcase full of banknotes to pay salaries and the embassy's bills."

Dozens of Iranian businessmen can be seen boarding every commercial flight from Tehran to Dubai, carrying suitcases full of cash to pay for the goods they need to import.

Iranian economic Mohammad Gholi Yousefi, told Tehran's Iskanews agency that Iran's economic situation is dire. "The World Bank's decision to suspend grants to Iran will impact directly and indirectly on our economy and further rake it over the coals," he said.

Since the US government's 25 October ban on economic relations with four Iranian banks - Melli, Mellat, Saderat and Sepah - the World Bank has decided to halt grants to Iran worth 5.4 million dollars.

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1) Sanctions disrupt the economy