Iran's nuclear ambition hits piggy banks

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TEHRAN -- Threats of an international financial squeeze stemming from the showdown over Iran's nuclear program have sent Iranians scrambling to get their savings out of the country, or if that won't work, to convert them into gold.

An estimated $200 billion has left the country since last year's election of Mahmoud Ahmadinejad as president, accompanied by panic buying of gold. The Iranian stock exchange lost an estimated 20 percent of its value even as other bourses in the region rose.

"The most tangible effect of the threat of sanctions in the private sector is downsizing," said Farhad Sanadizadeh, a Tehran-based oil and gas consultant who has let 40 employees go in the past six months. "A lot of companies are not hiring new people and reducing their work force."

Last week, it was disclosed that most European banks are no longer facilitating money transfers from Iranian banks. Iran has already removed most of its capital from European banks, according to press reports, fearing a possible assets freeze.

Iran says it has a right to generate atomic energy and insists its nuclear program is only for peaceful purposes, but the United States and most of its allies think it has a covert weapons program.

The five permanent members of the U.N. Security Council and Germany, meeting in Vienna, Austria, on Thursday, offered Tehran incentives in return for ending its nuclear program. Washington has offered to join direct negotiations with Tehran if it halts enrichment of uranium that could be used in weapons production.

Iranian officials have not responded directly to the offer, but Iran's top leader, Ayatollah Ali Khamenei, reiterated in a nationally televised speech yesterday that Iran will not give up its right to produce nuclear fuel.

"If you make any mistake, definitely shipment of energy from this region will be seriously jeopardized. You have to know this," he added in what was seen as a warning to Washington against military action.

The United States is pushing for U.N. sanctions if Tehran fails to comply with the Security Council demands. Amid the escalating tension, prices of basic and imported goods are rising in Iran.

Iran's high inflation, estimated at 12 percent, coupled with the effect of sanctions fever has made cooking oil and wheat more expensive since the Persian New Year on March 21.

Hossein Mohammadi, a 24-year old refugee from Afghanistan, cleans houses in the Iranian capital for a living after leaving his war-ravaged homeland for the stability of its western neighbor.

These days, walking through the late afternoon crowds of families and young people flocking onto the tree-covered boulevards of north Tehran, he worries increasingly about sanctions being imposed on his adopted homeland.

"The lady I work for has already sold her Peugeot 206 [an expensive, French car assembled in Iran] because she says that if there was an economic embargo, gasoline and spare parts will become so expensive that it'll just sit in the garage and rust," he said.

Many Iranians also remain defiant in the face of looming sanctions. Some argued that shortages were a way of life during the 1980s, when the eight-year Iran-Iraq war led to Iran's international isolation and a rationing regime.

The announcement in April that Iran has mastered the nuclear cycle played to nationalist sentiments, making many Iranians feel their country has attained a level of technological sophistication that allows it to take its place alongside the West's advanced nation-states.

However, not all Iranians support the nuclear program. There is a significant silent minority who say that, although it is their country's right to generate nuclear energy under the nuclear Non-Proliferation Treaty, it could come at a high cost.

"Stage by stage [the sanctions process] is starting, and it's all the fault of Ahmadinejad for insisting on us having a nuclear program," said Hamid Abedi, a 45-year-old furniture repairman who supplements his income by driving around in search of fares in the evenings.

"What's the point of us having nuclear energy if we're deprived of everything else?"