TEHRAN — Sanctions weren't supposed to hurt Majid Taleghani. But the Iranian book publisher says they have forced him to increase prices and scale back the number of titles he issues.
"In the past few weeks, the price of South Korean paper has soared at least 25%," Taleghani complained, chain-smoking nervously. "Why? South Korean banks refuse to open letters of credit. They won't work with Iranian banks anymore."
President Bush's recent tour through the Middle East was meant in part to rally U.S. allies against Iran before talks Tuesday in Berlin by members of the U.N. Security Council and Germany over the possibility of imposing a third round of sanctions on Iran to pressure the government to halt its nuclear program.
A year after the Security Council first imposed sanctions, they clearly have begun to have an effect. But in an echo of the debate over sanctions against Iraq under Saddam Hussein in the 1990s, diplomats and economic analysts disagree sharply over whether such measures would pressure those in power to change their policies or merely hurt the Iranian people.
"They have an impact; they have a heavy impact on the economy," said a Western diplomat in Tehran who is among those who regularly brief officials in Washington about the situation in Iran. "But will this have an effect on policy? That is the question."
A report released Wednesday by the Government Accountability Office, an independent auditing group that answers to the U.S. Congress, says, "The overall impact of sanctions, and the extent to which these sanctions further U.S. objectives, is unclear," and that foreign firms continue to make deals in Iran's state-controlled energy sector.
But on the streets and in the shops of Tehran, the capital, sanctions have had a visible effect, diminishing the ability of merchants and consumers to buy goods from Europe, forcing them to opt for cheaper Asian imports.
Prices of most goods, including French perfumes and German printing plates, have increased 50% in the last four months, merchants say, a result of the extra cost of doing business through Dubai, in the United Arab Emirates, instead of directly with foreign manufacturers and distributors. Many of those firms are wary of doing business with Iran lest they come under the scrutiny of the U.S. Treasury Department, which has begun aggressively targeting companies with ties to both the United States and Iran.
