Iran nuclear crisis: Sanctions 'beginning to bite'

Aircraft carrier USS John C Stennis in the Strait of Hormuz - photo 12 November 2011 Iran has told the US to keep the aircraft carrier John C Stennis out of the Gulf

The US has said threats by Iran to restrict Gulf shipping in the event of further sanctions shows international pressure is having an effect.

The State Department said sanctions on Tehran over its nuclear programme were starting to bite and that Iran was trying to create a distraction.

Iran has conducted 10 days of exercises near the strategically vital Strait of Hormuz, test-firing several missiles.

Its currency is at a record low, but it has denied sanctions are to blame.

The UN Security Council has already passed four rounds of sanctions against Iran for refusing to halt uranium enrichment.

Highly enriched uranium can be processed into nuclear weapons, but Iran denies Western charges that it is trying to develop them.

Tehran says its programme is peaceful - it needs nuclear technology to generate electricity to meet growing domestic demand.

Analysis

With the latest military exercises, Iran wanted to show it is a pretty powerful country and that sanctions won't get in the way of the military.

This is old-fashioned military strength - not a display of nuclear might.

Last week Iran's vice-president suggested that if the West tried to impose sanctions on Iran's oil industry, then Iran may shut the Strait of Hormuz - a narrow 34-mile-wide (54km) channel off Iran's southern coast through which about 20% of the world's traded oil passes. But Iran could not shut it on its own - the US Fifth Fleet is nearby in Bahrain and they wouldn't tolerate that.

And if Iran did try to do it, the country it would hurt most would be itself because Iran's government gets money and stays in power because of the sale of oil.

The US has also sanctioned dozens of Iranian government agencies, officials and businesses over the nuclear programme.

The government in Tehran has dismissed the latest measures announced in the wake of a critical IAEA report in November.

US President Barack Obama signed into law the US bill targeting Iran's central bank on Saturday. It enters into force in six months' time.

Since then, however, the Iranian national currency, the rial, has lost about 12% of its value - trading at about 17,200-18,000 rials to $1.

Earlier on Tuesday, French Foreign Minister Alain Juppe called for "stricter sanctions" and urged EU countries to follow the US in freezing Iranian central bank assets and imposing an embargo on oil exports.

'Mock' exercises

Speaking to journalists, the State Department's Victoria Nuland said Tehran was feeling increasingly isolated because of the sanctions.

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"Frankly we see these threats from Tehran as just increasing evidence that the international pressure is beginning to bite there and that they are feeling increasingly isolated and they are trying to divert the attention of their own public from the difficulties inside Iran, including the economic difficulties as a result of the sanctions," she said.

Meanwhile Pentagon spokesman George Little responded to Iranian warnings to keep an aircraft carrier out of the Gulf, saying the Navy was operating within international law and had no plans to pull warships out of the region.

November sanctions against Iran

  • The US named Iran as an area of "primary money laundering concern" to dissuade non-US banks from dealing with Tehran. It also blacklisted 11 entities suspected of aiding Iran's nuclear programme. Expanded sanctions to target companies that aid Iran's oil and petrochemical industries.
  • Britain ordered all British financial institutions to stop doing business with their Iranian counterparts, including the central bank.
  • Canada said it would immediately ban the export to Iran of all goods used in the petrochemical, oil and gas industries.

Iran has been holding a series of naval exercises in the Gulf, and on Monday said it had successfully test-fired a surface-to-sea Qader cruise missile, a shorter range Nasr and later, a surface-to-surface Nour missile.

A medium-range surface-to-air missile was successfully launched on Sunday, Iranian media reported.

Iran has conducted 10 days of exercises near the Strait of Hormuz, through which 20% of the world's traded oil passes.

Tehran said on Monday that "mock" exercises on shutting the strait had been carried out, although there was no intention of closing it.

The BBC's Iran correspondent James Reynolds says Iran is using the exercises to try to show that it owns the Gulf and has the military capability to defend against any threat to its dominance.

But, says our correspondent, few believe Iran would carry out its threat to shut the Strait of Hormuz as to do so would be considered too economically, politically and possibly militarily damaging for Tehran.

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