War weighs on Iran's economy as US intensifies sanctions

SANCTIONS COMPOUND TOLL ON IRAN’S ECONOMY

Washington has warned countries to cut business ties with Iran or face secondary sanctions, though the Treasury Department stopped short of imposing penalties against major Iranian trade partners such as China and India, which could have repercussions for the US and global economies.

The Treasury imposed sanctions on Egypt’s Banque Misr for doing business with Tehran, proposing a rule that would cut off the bank’s branches in the United Arab Emirates from dollar transactions.

Egypt’s central bank said it and the foreign ministry were in contact with US officials concerning the matter, adding the measure was limited to Banque Misr UAE’s US dollar transactions with correspondent banks only.

Banque Misr said later in a statement it was reviewing the US Treasury notice, adding that its branch in the UAE continued to provide banking services to its customers in line with applicable rules and procedures.

The US also issued sanctions targeting an entity based in Hong Kong and a person linked to Iran’s Bank Melli, according to a notice on the Treasury website.

The sanctions drive compounds the toll of the war on Iran’s economy, where annual inflation hit 66 per cent last month.

Supreme Leader Ayatollah Mojtaba Khamenei – who has not been seen publicly since he was injured in the initial Feb 28 attack that killed his father and former Supreme Leader, Ayatollah Ali Khamenei – called on the government to tackle the economic hardship.

“There is the need to seriously address the chain of economic and livelihood challenges, such as inflation, unemployment, management of prices and the market for goods and services,” according to a written statement attributed to Khamenei.

President Masoud Pezeshkian told state media that Iranian exports and imports had slumped nearly 35 per cent because of US sanctions and a naval blockade of Iranian ports.

But he said Iran was able to sell about 90 million barrels of oil during the short-lived memorandum of understanding that the US and Iran signed in June, when Washington permitted Iranian oil sales.

Later on Saturday, Pezeshkian called on state TV for a revival of the interim deal, which was signed on Jun 17 but quickly unravelled amid disagreements over what had been agreed, especially on the status of the Strait of Hormuz.

“We can solve our problems and gain our privileges with the memorandum of understanding,” he said of a document that had offered Iran, among other things, immediate relief from US sanctions and the release of its frozen assets.