Producing oil in Iran.
Producing oil in Iran. Photo by Reuters
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An internal Foreign Ministry document maintains that the additional sanctions imposed on Iran in recent months have caused far more damage to the Iranian economy than previous believed and have sparked additional domestic criticism of the regime.

Against this backdrop, Israel has stepped up its efforts to have the European Union impose another round of sanctions, a senior ministry official said. The Foreign Ministry's assessment of the impact of the sanctions on the Iranian economy and the stability of the regime appears to account for Foreign Minister Avigdor Lieberman's comments this week on Israel Radio regarding the stability of the Iranian regime.

In an apparent reference to the revolts in the Middle East, Lieberman said he was willing to take the risk of saying that the same "phenomenon" that has surfaced throughout the Arab world would occur in Iran within a year. "There is more and more domestic resentment there. This will again build up in advance of elections for the [Iranian] presidency. The Iranian leadership is also feeling this and is therefore escalating its rhetoric," Lieberman said.

The assessment of the greater impact of sanctions on Iran has been developed in part based on information and impressions provided to Israel by countries that maintain embassies in Tehran. A Foreign Ministry official who is intimately involved in the Iranian issue noted: "There are indications that the average citizen is actually blaming Iranian leadership for the situation and not the West, which has imposed the sanctions."

The Israeli official cited a number of examples reflecting the tough economic conditions in Iran, most notably a 50 percent decline in the volume of Iranian oil exports resulting from sanctions by the European Union and other countries, including the United States, Canada, Australia, Japan and South Korea. A year ago, Iran was exporting 2.4 million barrels a day; the figure has dropped to a million. As a result, the country's oil revenues have declined by $40 billion since the beginning of the year.

Due to sanctions imposed on the Iranian central bank, the regime has had difficulty gaining access to its foreign currency reserves, resulting in a disparity of more than 100 percent between the official rate of the Iranian rial and the rate at which it is trading on the black market. Last Tuesday alone, the value of the currency declined by 5 percent, despite efforts by the regime to halt the slide.

According to the senior Israeli Foreign Ministry source, Iranians are feeling the pinch of the sanctions in every aspect of their lives. "Basic necessities like chicken, bread, meat and electricity have gone up sharply in price," he said, adding that dozens of international corporations and financial institutions around the world have stopped doing business with Iran, either due to the difficulty of carrying it out, or due to concerns over future financial losses.

Domestic criticism in Iran over the financial situation created by the sanctions spilled over this month into complaints about President Mahmoud Ahmadinejad's bloated entourage to the United Nations General Assembly meeting in New York. The Iranian Ilna news agency quoted the deputy chairman of the national security committee of the Iranian parliament, Mansour Haghighatpour, as saying that the 140-person delegation had just gone to New York for a "picnic."

Officials at the Foreign Ministry acknowledge that, despite the heavy damage the sanctions have inflicted, there has been no change in the position of Iran's supreme religious leader, Ayatollah Ali Khamenei, regarding his country's nuclear program. Nonetheless, Foreign Ministry officials believe this is a good time to mobilize the international community to impose an addition round of sanctions that might force the Iranians to soften their stance and agree to a compromise on the issue of uranium enrichment.

Israeli ambassadors stationed in European Union capitals and in other Western countries have been holding talks for the past week in an effort to convince their host governments of the need to impose additional sanctions on Iran. The diplomats are emphasizing that Israel still prefers a diplomatic solution to the Iranian problem, but that the window of opportunity is closing, a senior Foreign Ministry official said. "We are explaining that the dimension of time is critical and that the Iranians have returned to negotiations only when they have been under pressure," he added.

Germany, Britain, and France are assisting Israel in efforts to impose an additional round of sanctions on Iran, and are pushing the process within the European Union with the goal of imposing sanctions on trade with Iran in general as well as on additional Iranian banks. This week, the American administration announced additional sanctions by classifying Iran's national oil company as being affiliated with the country's Islamic Revolutionary Guard Corps. This will limit the oil company's ability to acquire spare parts around the world.

On Friday, senior representatives of the six nations negotiating with Iran - the United States, Russia, China, Britain, Germany and France - are to meet in New York to discuss the future of talks with the Iranians, which are at a stalemate. The Iranians are refusing to respond to their proposals and are demanding that all of the sanctions be lifted in exchange for Tehran halting enrichment of uranium above 20 percent. Beyond the 20 percent level, there is concern that Iran will produce weapons-grade uranium.