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Iran Wants to Talk Now That Economic Sanctions Bite

Updated on February 17, 2012
American cars in an Auto Show in Tehran
American cars in an Auto Show in Tehran
Green revolution
Green revolution
Snowboarders in Iran
Snowboarders in Iran
Skateboarders in Tehran park
Skateboarders in Tehran park
Rollerblading
Rollerblading
Discontent
Discontent

Well, this is a sort of "stay tuned" thing with Iran. This tough boy barks and threatens quite a bit, ignores the world like a maverick, yet, when the West's economic sanctions start to pinch and then bite, the first to feel it are its people and its economy. The sanctions are just now starting to pinch, there still is no bite, the closer we get to July, the bigger the bite will be and Iran knows it.

To the average Iranian, a food basket in 2010 cost $74, today it is $144. These are just the basic staples most buy. The public knows what is coming and now many are stocking up of rice and cooking oil creating shortages as inventories empty. Ironically, these sanctions do not directly hit Iran's oil but those who do business with their banks, shipping companies, its Central Bank that all oil sales go through and SWIFT, the electronic connection that all banks in Europe, US and most of the world use. When the SWIFT connection is cut, within hours, Iran will be isolated from those who take credit or electronic payments for their goods. Iran will have to use cash to buy international goods. This will signal to nearly any company that deals with Iran for whatever goods to stop because it is not worth the hassle dealing with cash and large amounts of it. Much easier to send a electronic wire via SWIFT. Already key shippers of goods from Malaysia and India have stopped. The Ukraine which takes 70% of their corn, have refused now also.

Iranian docks have 12-15 ships waiting to be unloaded out at sea pending payment for the goods they carry. If SWIFT is ended, the ships will return home with cargo. Some ships with consumer food and goods have been waiting a month for payment. To make things for Iran, its own imports have soared from $86 billion in 2010 to $102 billion so far this year. One third of all Iranians diet is from food that is imported. Bread has doubled in price. For 2 lbs. of lamb, which has risen 30% since January, now costs 260,000 rials or $21. To the average worker who earns only $500 a month, lamb is for the rich. Iran's inflation is already at 20%.

Iran now wants to talk. They have elections in March. They have millions quite unhappy with their lives. They have the Green Revolution people fermenting freedoms. They have some things to worry about especially if the Iranian students and others take to the streets again. As one Iranian said, "you can't eat nuclear yellow cakes".

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