Sanctions strain Iran's economy, officials say

Telegraph.co.uk

Iran's banks are on the brink of collapse and its manufacturing industries facing severe shortages as sanctions bite, according to assessments by Western officials.

Despite recent public statements by President Mahmoud Ahmadinejad that sanctions by America and the UN "are not working", a confidential report submitted to the Iranian parliament said that continued economic isolation was having dire consequences.

The sanctions are designed to increase pressure on Teheran to reach a compromise with the UN over its nuclear enrichment programme.

The country's banking industry is suffering from a boycott by European, Japanese and American banks, Western diplomats said.

The biggest banks will not conduct any transactions with any Iranian clients, meaning that businesses are finding it increasingly difficult to find hard currency.

"There is no doubt that the Iranian regime is now paying the price in economic terms of its defiance of the international community," said a British official working closely with the UN on Iran.

"The sanctions are having a deeply negative effect on the Iranian economy and there is the prospect of more to come."

During recent parliamentary debates on the economy, several opposition politicians openly criticised the government for its handling of the sanctions and the intransigent position it has adopted over negotiations with the UN.

Many of Iran's major manufacturing industries are facing severe difficulties as a crippling shortage of equipment and materials from overseas suppliers has resulted in a dramatic fall in production.

Britain, France and the US are working on a draft UN security council resolution to strengthen the sanctions currently in place.

CIA launched defection program for Iran: report
WASHINGTON (AFP) — The US Central Intelligence Agency is running a secret program aimed at encouraging Iranians involved in the country's nuclear program to defect to the West, The Los Angeles Times reported on its website Sunday.

Citing unnamed current and former "intelligence officials familiar with the operation," the newspaper said the program called "The Brain Drain" was ordered by the White House in 2005 in hopes of undermining Iran's nuclear weapons program.

The effort achieved only limited success because fewer than six well-placed Iranians have defected, and none has been able to provide good information on Tehran's nuclear program, the report said.

The paper did not identify the defectors. But it said there was speculation of CIA involvement in the apparent defection of a former Iranian deputy defense minister, Ali Reza Asgari, who went missing last February during a visit to Turkey.

Potential defectors have not been approached by the CIA directly, The Times pointed out, citing a former US intelligence official. Rather, the spy agency used other contacts it has cultivated inside Iran, the report said.

Intelligence gathered through the program provided much of the information for last week's National Intelligence Estimate that argued that Iran had halted its nuclear weapons program in 2003, the paper said.