The government is trying to cope with the stricter sanctions but inflation continues to rise. It is currently 25 percent and headed for 30 percent in the next few months. Most luxury goods imports (including toilet paper) are now banned. The only items allowed in legally are those that preserve jobs (raw materials and components for factories) and keep the security forces going (“legal” smuggling of weapons and items needed for the nuclear and other weapons development and production). But there is already more illegal smuggling of luxury goods. People with money are willing to pay a big markup to get iPhones and softer toilet paper.
The impact of the sanctions can be best seen in how many rials it costs to buy a dollar. On September 24th it took 24,000 Iranian rials to buy one dollar on the black market. Last month it cost 39,000 rials, and now the government has managed to get that down to 32,000. The official exchange rate is 12,000 rials but there are severe restrictions on who can get dollars at that rate. Two years ago the market rate was under 11,000 rials per dollar.
The government refuses to negotiate halting its nuclear program or admitting that it is developing nuclear weapons. The government insists that Iran is getting stronger and that its Western and Arab enemies are getting weaker. In other words, Iran insists the sanctions are being handled.
The government is trying to buy up gold and prevent Iranians from exporting gold (which many merchants are doing to pay for imported goods). Since July, Iranians have been buying $2 billion worth of gold a month. The Iranian government is a major buyer and this appears to be part of the Iranian plan to cope with the sanctions. The government is not officially buying the gold, but considering the quantity bought and the large quantity of foreign currencies used, the Iranian government is most likely behind much of this activity. The government is also trying to arrange major barter deals with neighboring countries. Thus Iran could trade oil for food and consumer goods. This is illegal according to the sanctions, but easily circumvented if done with a neighbor.
The U.S. has put sanctions on more individuals and organizations for persecuting journalists in Iran and jamming satellite news broadcasts from outside Iran.
The U.S. recently revealed that two Iranian Su-25 ground attack aircraft had fired on (and missed) an American Predator UAV on November 1st. Iran claimed the UAV was within its territory, the U.S. said it was not. This incident is one of a growing number where Iranian warplanes and warships dispute the location of international boundaries. Saudi Arabia is threatening to fire on Iranian warplanes and ships that continue to violate the 1968 treaty that set the boundaries between Iranian and Saudi offshore oil fields. Iran apparently does this sort of thing to intimidate the Saudis, and firing on a U.S. UAV is apparently more of the same. Most of these border violations are carried out by the Islamic Revolutionary Guard Corps, which has always been more aggressive and reckless than the regular police and armed forces. The Guard Corps are on a Mission From God and that explains many of their actions.
Iran is increasing the number of warships assigned to guarding disputed islands in the Persian Gulf. The United Arab Emirates (UAE) persists in disputing possession of three islands (Greater Tunb, Lesser Tunb, and Abu Musa) in the Persian Gulf, which Iran seized by force in 1971, and refuses to give back. Iran ignores the fact that Arabs live on the islands and would rather be ruled by Arabs. A few percent of Iranians are Arabs and they are not treated well. This annoys Arabs in general but also makes it clear that Iran does not fear Arabs and continues to strive for domination of the Moslem world. This most Arabs see as blasphemous because Iran is run by Shia clerics, a Moslem sect considered heretical by many Sunnis. Some 80 percent of Moslems are Sunni and the Arabs running Saudi Arabia are extremely Sunni. Thus, by making some provocative statements about the disputed islands, a media storm is generated in the Arab world, blocking out discussion of anything else Iran is doing, for a while anyway. Basing more patrol boats on the disputed islands provides more targets in the event of a war over the islands. The Arab states on the west coast of the Gulf have been able to build up a much stronger air force than Iran possesses, but Arabs still fear Iran because the Iranians have been beating Arabs in battle for thousands of years. Reputation and track record does count for something.
November 6, 2012: Iran’s state owned airlines have increased air fares 70 percent to pay for the higher cost of imported aviation fuel.
November 5, 2012: Five bombs went off in Bahrain, killing two people. For nearly two years the Shia majority in Bahrain have been waging an “Arab Spring” uprising against their Sunni monarchy. Bahrain blames Iran for encouraging the violence and specifically blames agents from the Lebanese Hezbollah organization for helping to build and place the bombs. Hezbollah was founded and is sustained with cash, advice, and weapons from Iran.
October 31, 2012: Two Iranian Navy ships left Sudan after a three day visit. The corvette and supply ship were serving with the anti-piracy patrol off Somalia but were believed to be secretly moving forbidden cargo between Sudan and Iran. The two countries have long been allies and Iranian weapons have been found in Sudan (during use against various rebel groups).