Iran plans more war games in strait as sanctions bite
07 January, 2012
TEHRAN: Iran announced plans on Friday for new military exercises in the world's most important oil shipping lane, the latest in weeks of bellicose gestures towards the West as new sanctions threaten Tehran's oil exports. Real Admiral Ali Fadavi, naval commander of the Revolutionary Guards Corps, said exercises next month would focus directly on the Strait of Hormuz, which leads out of the Gulf and provides the outlet for most Mid-East oil. Iran held a 10-day drill which ended on Monday in neighbouring seas. "Today the Islamic Republic of Iran has full domination over the region and controls all movements within it," Fadavi said in remarks reported by the Fars news agency. Iranian officials have threatened in recent weeks to block the strait if new sanctions harm Tehran's oil exports, and this week said they would take action if the United States sails an aircraft carrier through it. The United States, which has a massive naval fleet in the area that is overwhelmingly more powerful than Iran's sea forces, says it will ensure the international waters of the strait stay open. Britain said on Thursday that any attempt to close it would be illegal and unsuccessful. New financial sanctions signed into law by US President Barack Obama on New Year's Eve are aimed at making it difficult for most countries to buy Iranian oil. The European Union is expected to announce tough measures of its own at the end of the month. Most traders believe Iran will still be able to find buyers, at least in the short term, for its exports of 2.6 million barrels of oil per day (bpd). But it may have to offer steep discounts that reduce the hard currency revenue it needs to feed its 74 million people. The sanctions are already having an effect on Iran's streets, where prices have been rising and the rial currency is falling. Iranians have been queuing up at banks to convert their savings into dollars. The economic hardship comes less than two months before a parliamentary election, Iran's first since a 2009 presidential election that led to mass street protests across the country. Iran's rulers successfully put down those demonstrations two years ago with force, but since then the Arab Spring has shown the vulnerability of authoritarian governments in the region to public protest fueled by anger over economic hardship. Washington and its allies are imposing the measures to force Iran to abandon a nuclear programme which they say is aimed at producing an atomic bomb. Iran says the programme is peaceful. European Union officials say the EU, which collectively buys about 500,000 bpd of Iranian oil, rivaling China as the largest market, has agreed to impose an embargo halting all imports. EU diplomats said they are discussing how long they will give member countries to halt purchases, with France, Germany and others wanting the ban imposed within three months but Greece favouring a grace period of up to a year. China has also cut its imports by more than half in January and February while haggling with Tehran over the size of the discount it wants in return for doing business with it. Other big buyers, including Turkey and Japan, say they are seeking a waiver from the US sanctions. The new American law allows Obama to give temporary waivers to allies to continue to buy Iranian oil to prevent a price shock, but to receive the permits, countries are meant to show they are reducing trade with Iran. Iran has put on a brave face over the sanctions. Foreign Minister Ali Akbar Salehi said on Thursday the country would "weather the storm". End.
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