U.S. ratchets up economic war against Tehran

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TEHRAN, Iran -- All over this city of 12 million people, high-rises are under construction, local engineers and Chinese contractors are rushing to finish a multilevel highway, and the streets are lined with billboards promoting the latest tablets and washing machines made by South Korean companies such as Samsung and LG. Supermarkets are fully stocked, and it seems as if new restaurants and fast-food joints are opening up every day, and never lacking for customers.

In short, you would not know that oil exports from Iran have dropped by a million barrels a day, and that the free fall in the currency has caused huge inflation -- the result of U.S. and European-led sanctions as well as economic mismanagement by the Iranian government.

The West escalated the economic war another notch Wednesday, imposing a new set of restrictions intended to force Iran into what amounts to a form of barter trade for oil, because payments for oil deliveries can no longer be sent to accounts inside Iran. A senior Obama administration official called the latest step "a significant turning of the screw," repeating the administration's four-year-long argument that the mullahs in Iran face a "stark choice" between holding onto their nuclear program and reviving their oil revenue, the country's economic lifeblood.

But there is little confidence among U.S. officials in Washington -- and little evidence on Tehran's streets -- that even newly stringent sanctions have much chance of forcing Iran's supreme leader, Ali Khamenei, into striking the deal that most Americans and Europeans, and even some Israelis, say could defuse the crisis.

The sanctions, while the source of constant complaint and morbid jokes, have not set off price riots or serious opposition to the Iranian government. In fact, the past year has not been all that bad, as Saeed Ranchian, 39, a shopkeeper peddling perfumes in Tehran's Grand Bazaar, said.

"... in Iran, when prices go up, people start buying more, fearing even higher prices," he said, adding with a laugh that the country's economy "has rules that no one understands."

Administration officials were disturbed by a new analysis, prepared for President Barack Obama and his staff, that paints a picture of the supreme leader as so walled off from what is happening with his country's oil revenues that he is telling visitors that the sanctions are hurting the United States more than they are hurting Iran.

The outlines of a nuclear deal have been clear for months: an Iranian agreement to limit the number of centrifuges it has producing uranium, and shipping much of its most potent stockpiles -- the stuff that can be converted to bomb fuel -- out of the country. It would also have to agree to exposing the history of nuclear work, perhaps including weapons technology, that it has refused to show international inspectors. In return, Iran would get an acknowledgment that it has a right to peaceful nuclear enrichment, and a gradual lifting of the sanctions.

Instead, Iran announced last week that it would deploy a new generation of centrifuges, four to six times as powerful as the current generation.



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