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Six world powers have urged Iran to open its Parchin military site to IAEA inspection, amid reports that Tehran may be cleaning it of evidence of nuclear arms-related experiments.
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Amid an economic crisis caused by international isolation and domestic mismanagement, many goods in Iran have doubled in price over the past year.

Sanctions Bite as Iran’s
Nuclear Program Continues

The United States has begun to implement an increasingly aggressive array of sanctions on Iran, including the country’s central bank. These sanctions have exerted a powerful—if not crippling—impact on the Iranian economy. At the same time, the Islamic Republic continues to make rapid progress in its quest to achieve a nuclear weapons capability, and, in an alarming step, has started enriching uranium closer to weapons-grade at an underground facility built into a mountain.

New Sanctions Exert Strong Impact on Iran

At the end of 2011, Congress enacted new sanctions targeting the Central Bank of Iran (CBI) and any foreign financial firm that continues to conduct significant transactions with the bank. Since Iran uses the CBI to receive payment for oil exports—the foundation of its economy—the sanctions have the potential to cause severe economic disruption.

Indeed, the mere passage of the legislation has led to a run on the Iranian currency, the rial, which has fallen about 50 percent in value since last fall and is now trading at record lows against the dollar. Tehran has taken some drastic steps in response to the escalating crisis, including blocking text messages that contain the word “dollar.” Unofficial currency trading has been banned and plain-clothes police roam currency exchange booths searching for violators.

The devaluation of the rial has been coupled with rising inflation and reduced buying power for the average Iranian. The value of cash payments families receive as compensation for subsidy reforms has been slashed in dollar terms from about $45 a month to less than $27.

The new sanctions are also causing purchasers of Iranian oil to look for alternative suppliers, as they will no longer be able to use the CBI to make payments for their oil imports. Japan, South Korea, India and China are all in the process of cutting their purchases of Iranian crude.

Adding to Tehran’s woes, on Jan. 23 the European Union announced a ban on Iranian oil imports and a freeze of the CBI’s assets. After the sanctions vote, British Prime Minister David Cameron, German Chancellor Angela Merkel and French President Nicolas Sarkozy issued a joint statement urging Iran to suspend its dangerous nuclear activities. “… [T]he Iranian leadership has failed to restore international confidence in the exclusively peaceful nature of its nuclear program,” the statement said. “We will not accept Iran acquiring a nuclear weapon.”

Most recently, a global communication network vital to the banking industry announced on March 15 that it was expelling as many as 30 Iranian financial institutions, including the Central Bank. This action by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, severs a crucial conduit for Iran to electronically repatriate billions of dollars’ worth of earnings from the sale of oil and other exports.

Iran Pressing Ahead with Nuclear Program

Despite these sanctions, the regime remains defiant. Tehran is now enriching uranium to the 20-percent level at a previously undisclosed facility on an Islamic Revolutionary Guard Corps (IRGC) base near Qom, according to inspectors from the International Atomic Energy Agency (IAEA). Enrichment to this level marks 80 percent of the work needed to produce fissile material for the core of a nuclear weapon.

The facility at Qom is buried deep inside a mountain and is protected by air defense missile batteries and the IRGC, making it virtually impregnable to outside interference. Its existence was long kept secret and was only acknowledged by Iran after being identified by Western intelligence agencies in Sept. 2009.

Using its current centrifuges, Iran could have by the end of this year a sufficient stockpile of higher-enriched uranium to produce enough weapons-grade material for a bomb, according to Olli Heinonen, the former deputy director of the IAEA. This timeframe could be significantly reduced if Iran installs advanced centrifuges currently being tested.

There is no peaceful use for Iran’s rapidly expanding enrichment capacity. The current stockpile of uranium enriched to 20 percent is more than enough to fuel the single research reactor Iran has and produce medical isotopes for the next decade—Iran’s original justification for boosting the quality of its nuclear output.

Iran’s new enrichment follows a November report from the IAEA detailing the advanced military dimensions of Tehran’s illicit nuclear program. The report publicly confirmed that Iran has engaged in activity related to the development of nuclear weapons, saying the agency has “credible” information indicating “that Iran has carried out activities relevant to the development of a nuclear explosive device.”

“What we know suggests the development of nuclear weapons,” Yukiya Amano, director general of the IAEA, said. “I have absolutely no reason to soften my report. It is my responsibility to alarm the world.”

Returning to Negotiations Amid Iranian Intransigence

The so-called P5+1 group of world powers, comprising the United States, Russia, China, France, Britain and Germany, recently indicated its readiness to resume talks with Iran on the nuclear issue. Tehran, meanwhile, has snubbed repeated demands to fully cooperate with the IAEA.

The Islamic Republic has refused to let international inspectors enter a military complex which, the IAEA suspects, houses a facility for conducting tests related to the production of a nuclear bomb. Furthermore, Western diplomats say Iran may be delaying access to the Parchin facility in order to give it time to sanitize the facility of any incriminating evidence.

The world powers have urged Tehran “to fulfill its undertaking to grant access to Parchin.” In unusually blunt criticism, Yukiya Amano earlier this month accused Iran of seeking to “tie our hands” and once again called on the country to resolve outstanding issues.