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Iran Staggers as Sanctions Hit Economy
(New York Times) Thomas Erdbrink - For years, Iran's leaders have scoffed at Western economic sanctions. Now, as they seek to negotiate a deal on their nuclear program, the leaders are acknowledging that sanctions, particularly those applied in 2010 on international financial transactions, are creating a hard-currency shortage that is bringing the country's economy to its knees. Iran news outlets have reported that the government owes billions of dollars to private contractors, banks and municipalities. Because of the sanctions, oil sales, which account for 80% of the government's revenue, have been cut in half. While Iran's foreign exchange reserves had shrunk to $80 billion by mid-2013, 3/4 of that amount is tied up in escrow accounts in countries that buy Iranian oil - the result of an American sanctions law that took effect in February. Under that law, the money can be spent only to buy products from those countries. Even gaining access to the remaining $20 billion is difficult because of Iran's expulsion from the global banking network known as Swift.