Fistfuls of dollars: How Iranis reacting to nuclear crisis

One measure of the anxiety coursing through Iranian society in the light of American and European sanctions over its nuclear programme can be seen on Manouchehri Street, a winding Tehran lane where men gather to buy and sell US dollars.

The regime has raised the exchange rate and sent police in to stop the black marketeers, but with confidence in Iran’s rial collapsing, trade goes on.

“Am I afraid of the police? Sure, but I need the money,” said Hamid, a construction engineer standing amid a crowd of other illicit currency traders. “Food prices are going up, and my salary is not enough.”

Glancing around him, he added that he had converted almost all of his assets into dollars. Like many Iranians, he had also stockpiled rice and other staples.

This manic trade is not fuelled by economic collapse – the European oil embargo has yet to take effect, and there is plenty of food on the shelves – but a rising sense of panic about Iran’s encirclement, the possibility of war and the prospect of economic pain to come. The last round of sanctions on Iran’s Central Bank has begun inflicting unprecedented damage on the private sector, traders say, making it so hard to transfer money abroad that rich businessmen are sometimes forced to board planes carrying suitcases full of US dollars.

“Business customers have been coming to us saying clients are giving up on them, believing they will not be paid,” said Parvaneh, a 41-year-old woman working at a Tehran bank.

The rising economic panic has intensified bitter divisions within Iran’s political elite. A number of insiders, including members of the elite Islamic Revolutionary Guards, have begun openly criticising Iran’s supreme leader, Ayatollah Ali Khamenei. One of president Mahmoud Ahmadinejad’s aides indirectly accused the ayatollah of needlessly antagonising the West. Iran imports as much rice and other staples as it grows, meaning trade embargoes will hurt.

Javad’s travel agency is a striking illustration of Iran’s plight. With six weeks left before the Persian New Year, the phone should be ringing with reservations for holiday travel, he said. Instead, “there’s been no business for the past three weeks.”

It’s not just that travellers are frightened. The agency cannot price its holidays, as exchange rates fluctuate so wildly.

“We know they want to pressure us so we rise against our government, but we are not in a position to do that,” said Murad, a 41-year-old waiter at a Tehran teashop. Like many ordinary Iranians, he seemed to blame both his government and the West. He makes about $50 a day in the shop where he has worked for 25 years, but with three children at home, his life has got harder in the past year.

“Prices are going up so much I have to work all the time, and we still can’t buy new clothes,” he said. “The rich don’t suffer, they are protected. The truth is, we’d like to have good relations with the West. What is the point of ‘Death to the USA’? But what can we do about this?”

“So you kill the pistachio trade in Iran,” one businessman added. “How does that stop nuclear enrichment?”