Iranian official says sanctions won’t impede Tehran’s nuclear progress

April 22, 2013

Iran’s economy is clawing its way back to health after nearly a year of harsh Western sanctions, the country’s top financial official said in an interview in which he insisted that no amount of outside pressure would force Tehran to change its nuclear policies.

Seyed Shamseddin Hosseini, minister of economic affairs and finance, said his government was finding new ways to soften the impact of tough sanctions imposed last summer, despite a steep loss in oil revenue that has driven up prices and battered the Iranian currency, the rial.

Hosseini said structural changes implemented by Tehran since last year would improve the country’s ability to withstand Western pressure. He predicted that sanctions would strengthen the economy in the long run by forcing Iranians to diversify and become more self-reliant.

“At first we witnessed inflationary shocks, but then we saw that we could use our domestic capacity to increase our competitiveness,” Hosseini told The Washington Post during a weekend visit to attend an international financial conference.

The United States and its allies have imposed tough sanctions on Iran in an attempt to persuade Tehran to accept restrictions on its nuclear program and allow fuller international inspections of its atomic facilities. Negotiations between the two sides have made little progress.

Hosseini said Western experts who predicted an economic disaster in Iran are “now obliged to reconsider” as the country marks its 10th month under unprecedented banking restrictions and an embargo on oil exports to Europe.

“They did not understand the power of our resistance,” Hosseini said. “They thought that by a small change in the foreign exchange rate, Iran’s economy would collapse. But as time goes on, they realize that Iran is adapting and we are changing threats into opportunities.”

Although he acknowledged painful cuts in oil revenue, Hosseini asserted that other sectors of Iran’s economy had benefitted from the drop in the value of the rial. Agricultural and mining exports have increased, he said, and more Iranians are buying domestic products — including automobiles and electronics — rather than spending money on expensive imports.

In any event, Hosseini said, Iran would not be dissuaded by outside pressure from seeking “modern technologies” that will enable the country to reach its economic potential.

“The Iranian people are determined to follow the nuclear route,” he said.

Independent experts have generally described the effect of Western sanctions in starker terms, noting Iran’s inability to make up for revenue losses amounting to tens of billions of dollars. At the same time, economists and Iran experts have expressed surprise at the country’s ability to contain popular unrest as millions of Iranians suffer economic privations caused by the steep drop in the value of the rial.

The unprecedented economic pressure has had little appreciable effect on Iran’s nuclear program, which has continued to expand in the months since the toughest sanctions took effect. Two rounds of international negotiations this year failed to yield nuclear concessions from Tehran.

The Obama administration has urged patience, saying that the economic toll on Iran from sanctions will increase further in the months to come. On Sunday, Defense Secretary Chuck Hagel said sanctions “are hurting Iran significantly.”

“I don’t know of an international regime of sanctions that have been more effective, have been more unified and tougher than what’s being applied to Iran,” Hagel told reporters while en route to Israel.

On Monday, a group of former military and intelligence officers and senior policymakers urged the administration to increase direct diplomatic efforts with Iran to solve the nuclear crisis, arguing that economic sanctions alone would not change the behavior of the country’s ruling clerics.

“We must break the decades-long cycle of mistrust,” said Thomas Pickering, a career diplomat and former undersecretary of state for political affairs, one of the 30 former officials signing a statement calling for direct diplomacy. “After 30 years of sanctioning and trying to isolate Iran, it is doubtful that pressure alone will change the decisions of Iran’s leaders or get a desired outcome now.”

Joby Warrick joined the Post’s national staff in 1996. He has covered national security, intelligence and the Middle East, and currently writes about the environment.
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