Although European Union sanctions on Iranian oil won't kick in until July 1, their passage has already compounded Iran's currency crisis, accelerated runaway inflation and heavily threatened the economy, Reuters reports. The resulting chaos puts additional pressure on the regime, which ignores the pain of Iran's public at its own peril.
Following the EU passage of a ban on Iranian oil imports on Monday, Iranians have rushed to sell off their country's plummeting currency in favor of dollars and gold. The value of the rial dropped 50 percent less against the dollar in the past month, prompting one senior Iranian politician to describe the crisis as worse than that experienced during the eight year Iran-Iraq war during the 1980s.
The EU action is part of a growing set of economic sanctions intended to curtail Iran's nuclear weapons program.
Iranian President Mahmoud Ahmadinejad responded by raising interest rates in Iranian banks. But the sudden decision hasn't helped businesses or the average Iranian, and has instead compounded angst about the sanctions. Iran has also threatened to close a critical juncture point for oil shipments, the Strait of Hormuz, increasing the possibility of military conflict.
Although Iranian-ally China has railed against sanctions, they plan to capitalize on them to negotiate a better price for Iranian oil. Oil supplies more than 50 percent of Iran's national budget, and the lower prices will hit any military preparations by the Islamic Republic.