The recession caused by the new sanctions (because of the nuclear weapons program) is played down by state-controlled media. But oil income has been cut in half, and efforts to deal with that have only been partially successful. The cost of living has gone up, often way up, for most Iranians, and the government is trying to play down this unpopular trend. Inflation is over 30 percent and unemployment over 20 percent. Both numbers are rising and the government is desperately seeking ways to prevent this from turning into popular unrest. Current GDP is about $480 billion a year and if the reduced oil exports continue, GDP will be down to about a percent a year (or less, versus growth of over five percent without sanctions). Iran has sufficient hard currency reserves to continue essential imports (food and other consumer goods) for another two years. Despite a lot of corruption by the ruling clerics and their families (who control or own about half the GDP), the other half of the economy is quite robust and productive. Most Iranians are angry at the corruption and harsh rule of the clerics, but about twenty percent of the population benefits from working for the clerics, and a lot of these supporters have weapons and are willing to kill to keep things as they are. So the majority grumbles and gets by as best they can.
The new (2012) sanctions sought to block Iranian access to the international banking system and thus make it difficult for Iran to sell its oil. Iran has responded by offering oil and natural gas at lower prices if buyers will cooperate with various Iranian schemes to get around the banking and insurance problems. Major customers for Iranian oil (like India, Turkey, and China) have allowed their businesses to take part in some of these scams (which involve things like barter and new insurance companies for the illegal shipments and the tankers that carry the oil). While the barter deals are now widespread, they increase prices for imported goods and many items cannot be purchased via these deals. There are growing shortages of many items inside Iran. The net effect is to make the economy less efficient and that is gradually reducing GDP. Iran is trying to get more of its trade off the books and hidden from the international financial institutions that normally facilitate trade. Iran is determined to beat the sanctions by any means necessary.
Another round of negotiations between the West and Iran over Iranian nuclear weapons is taking place in Kazakhstan. Iran wants to get rid of the crippling economic sanctions but is apparently not willing to halt its nuclear weapons program. Even the UN IAEA
(International Atomic Energy Agency) believes that Iran is deliberately enriching uranium to weapons grade levels and trying to hide this. IAEA believes the new sanctions are not slowing down Iranian work on nuclear weapons and that Iran is in the process of greatly increasing its enrichment efforts and is probably developing nuclear weapons.
The Islamic rulers of Egypt have resumed diplomatic and other relations with Iran. This is not popular with most Arabs, who back the current unofficial war between largely Sunni Arabs and Shia Iran. There’s also the ethnic angle, with Arabs being Semites and Iranians Indo-European. Iran has made no secret of its desire to become the leader of the Moslem world, at least in a religious sense. That job is now shared by Saudi Arabia and major centers of Islamic learning, with Egypt being one of the main ones. As a result, the reappearance of Iranian Shia religious pilgrims in Egypt (after a three decade absence) has caused unrest among Sunni Islamic conservatives. Centuries ago Egypt was Shia, and there are still some Shia religious shrines in the country. Egyptian Islamic conservatives are threatening violence against the visiting Iranians and against the Egyptian government for allowing this sacrilegious state of affairs. Iran is also accused of trying to convert Sunnis to Shia Islam and sponsoring anti-Sunni terrorism wherever it can (especially in Syria, Lebanon, and Iraq). Sunni conservatives consider Shia heretics and most Sunni Islamic terrorists consider it their religious duty to kill heretics.
Iranian support for the beleaguered Assad government of Syria has not diminished. A
growing number of pro-Assad fighters are being flown to Iran for training in special urban fighting and irregular warfare tactics. Iran is helping Assad to build a special infantry force of men trained in urban warfare. Iran is paying for support from the Hezbollah Shia militia of Lebanon, which is supplying Assad with gunmen and supplies. Many Syrians (especially the Sunni majority) believe that when the Assad government falls Iran support partition of the country and will try to establish a Shia state along the Syrian coast where most of the population is Alawite (a Shia sect that about ten percent of Syrians belong to). The Assads are Alawite and the Alawites have basically run the country for over four decades. The current rebellion in Syria is mainly the Sunni majority (about 80 percent of Syrians) against the Alawites.
April 4, 2013: Iran, North Korea, and Syria were the only UN nations to vote against a new treaty to make it illegal to sell weapons to nations or groups the UN had declared as someone weapons should not be sold to (because it would lead to the deaths of civilians or similar bad behavior). The three nations blocking the treaty (which must win the approval of all UN members) is mostly a feel-good effort because many nations have to get their legislatures or courts to approve of the treaty, and even if the treaty goes into force the fine print provides many opportunities to get around it. Iran, North Korea, and Syria are opposing it because they see stuff like this as part of an international plot against them.
March 26, 2013: Iran is denying that 18 people arrested for spying in Saudi Arabia last week worked for them. That may be true, but so many Iranian agents have been caught in the last few years that it is generally accepted that the Iranian espionage efforts continue in Arab countries. Arabs see Iranian efforts to develop nuclear weapons as aimed primarily at them. Iran has dominated the region for thousands of years and many Iranians believe that a new Iranian empire would be possible if Iran controlled all the oil in the region. This, along with Iranian clerics calling for Shia (mainly Iranian) control of the Moslem holy places in Mecca and Medina, just adds to the growing Arab paranoia about Iran.