• Iranian: 'Our money is becoming more and more worthless every day'

    Raheb Homavandi / Reuters file

    A money changer holds Iranian rial banknotes as he waits for customers in Tehran's business district in this January 7, 2012 file photo.

    Ali Arouzi writes
    TEHRAN – Even though threats of war with Israel are almost a daily occurrence, what’s really on people's minds in this city is the economy.

    The United States, the European Union and the U.N. have imposed tough economic sanctions against Iran, blocking access to the international banking system and curbing sales of Iranian crude oil as a way to persuade Tehran to abandon its nuclear program.

    See our full coverage on international hot spots crucial to U.S. foreign policy ahead of elections in our At the Brink series here. And on Sunday, Sept. 30, and Monday, Oct. 1, tune into special coverage on all NBC News platforms from NBC’s team of anchors and correspondents deployed in five countries across the region.

    As a result, Iran’s currency, the rial, is in a constant state of flux, but mostly on a downward trajectory. These days, it seems to fall in value against the dollar on an hourly basis. On Tuesday the currency hit an all-time low against the U.S. dollar, trading at 26,500 to the U.S. dollar on the open market, according to Persian-language currency tracking website Mazanex. 

    “Our money is becoming more and more worthless every day,” said Sarvenas Sadi, an elderly woman doing her daily shopping in Tehran earlier this week.

    She picked up a handful of limes and exclaimed, “These were 100 percent cheaper last year!”

    Asked whether she ever thought she would see the currency devalue so much, she replied, “Never! I remember before the [1979] revolution $1 was worth 70 rial, now it’s worth 26,000! Who would have ever have thought!”

    Iranians feel the pain of sanctions: 'Everything has doubled in price'

    Did she think things would ever balance out and the price of goods would come down to what they were before. “Unfortunately I don’t think so. The thing with Iran is that once the price of something goes up, it never comes down again.”

    So what’s the solution?  “Eat less limes,” she jokingly replied. 

    AP

    Two potential Iranian customers look at fabric bolts in Tehran's old main bazaar in this picture taken July 14, 2012.

    Manufacturing hit hard
    The financial situation is affecting people from all classes. Thousands of workers have been laid off and have not been paid back wages because companies have simply run out of money. Majid, a 32-year-old mechanic who used to work for a large car company was recently laid off and is owed six months’ salary.


    “They are laying off people left, right and center. I doubt there will be a company left by the New Year,” he said, giving just his first name because of the sensitivity of the issue in Iran. Persian New Year will be on March 21, 2013.

    The car industry, one of the biggest manufacturing sectors in Iran and a massive employer, has been affected dramatically; Iranian media have reported a 30 to 50 percent drop in car and component production in the past six months. Iran was the 13th-largest auto maker in the world in 2011, producing 1.6 million vehicles.

    The Iran Khodro Company, the country’s leading vehicle manufacturer, had become the largest vehicle manufacturer in the Middle East, Central Asia and North Africa.  The company won the annual national prize for export activities in 2006 and 2007 with Russia, Syria, Turkey, Iraq, Azerbaijan, Ukraine, Egypt, Algeria and Bulgaria among their key consumers.

    But higher prices, due to the soaring costs of components as a result of the sanctions, have caused a drop in demand.

    Israel's Netanyahu: Draw 'clear red line' to stop Iran from getting nuclear weapons

    For instance, France's Peugeot Citroen halted shipments of vehicle kits for assembly in Iran earlier this year, saying international sanctions barring transactions with the country's banking system made it difficult to obtain sales financing.

    Sanctions have taken a toll on the Iranian economy. The government is reluctant to admit it. Inflation is high. The number of young unemployed is a growing concern. NBC's Ali Arouzi reports. 

    Majid, the mechanic, said he is looking for work elsewhere but it is proving very difficult. “There are not many jobs going and it is getting me more and more depressed.”

    Oil sales to travel - down
    The oil sector has been hit hard too.  The Iranian Labor News Agency reported that a letter on behalf of 20,000 oil workers from across the country was sent to Labor Minister Abdolreza Sheikholeslami complaining that they had not been paid in months. The letter demanded an increase to the worker’s salaries of $120 to $285 a month, adding that at the current rate they were "way below the poverty line.” 

    Mohammad Reza Bahonar, a prominent Iranian member of parliament, said oil exports in June-July had dropped to "around 800,000 barrels per day," according to a report by ISNA news agency. That’s a low not seen in more than two decades, and less than half the 2.3 million barrels per day exported just a year ago.

    But Minister of Petroleum Rostam Qasemi was quoted by ISNA saying that overall oil production this year "will be the same as last year."

    Israel's Prime Minister Benjamin Netanyahu called for a firm deadline for Iran to halt its nuclear program, using a simple drawing to warn the UN that Iran will soon reach the point of no return in its development of nuclear weapons. NBC's Andrea Mitchell reports.

    The strangling of the economy isn’t just affecting blue-collar workers.

    Middle-class Iranians had become accustomed to foreign travel – to Dubai, a playground for Iranians only an hour and half away, Turkey, one of only a few countries that does not require visa’s for Iranians, and Thailand. But the cost of travel to any of these destinations is prohibitive to many.

    More Iran coverage from NBC News

    Maryam, a travel agent in Tehran who also only gave her first name, estimated that the number of travelers has been halved in a year. “The price of tickets and organized tours increased almost a hundred fold. They say that this will boost domestic holidays, but I think that is even too expensive for most people.”

    This was evident to me last month flying back to Tehran from London via Dubai. Usually the flight from Dubai to Tehran is jammed, but not this time. Business and first class were full with the super-rich of Iran, but 70 percent of the plane which makes up the economy class was almost empty.

    As the American mission in Afghanistan winds down, dangers still abound for U.S. troops – the most recent incident involved a Taliban gunman who fired on a U.S. Marine outpost in Afghanistan's Helmand Province. NBC's Richard Engel reports.

    Expected to get worse
    Mehdi is a young entrepreneur who imports computers and accessories who also spoke on the condition of anonymity. He said people are just not buying in Iran right now. His biggest wish was that the value of the rial would just stay fixed against dollar – even if it was at an unfavorable rate – just so consumers would know how much things would cost in a weeks’ time, a day or even in the next few hours.

    While the sanctions have certainly taken a major bite out of the economy and are hurting people from all walks of life – it does not seem to be making the government authorities buckle. If anything it seems to have stiffened the government’s resolve and things are set to become even more difficult in the not too distant future.  

    Britain, France and Germany are urging their European Union partners "to further step up the pressure" on Iran. Further sanctions targeting the Islamic Republic's energy, finance, trade and transportation sectors are expected to be formally adopted on Oct. 15.

    Slideshow: Everyday life in Iran

    At schools, in shops, and on the streets of big cities and small towns, daily life plays out in Iran.

    Launch slideshow

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  • NBC's Ali Arouzi answers reader questions from Iran

    While Iran’s President Mahmoud Ahmadinejad and Israeli Prime Minister Benjamin Netanyahu traded verbal jabs at the United Nations General Assembly this week over the threat of Iran’s nuclear capability, one thing is for sure: international economic sanctions against Iran are having an impact. 

    See our full coverage on international hot spots crucial to U.S. foreign policy ahead of elections in our At the Brink series here. And on Sunday, Sept. 30, and Monday, Oct. 1, tune into special coverage on all NBC News platforms from NBC’s team of anchors and correspondents deployed in five countries across the region.

    The United States, European Union and the U.N. have imposed tough economic sanctions against Iran, blocking access to the international banking system and curbing sales of Iranian crude oil as a way to persuade Tehran to abandon its nuclear program.

    As Ali Arouzi, NBC News Tehran Correspondent, reports today, the sanctions have had a real impact on Iranians as the value of their currency, the rial, continues to drop daily – affecting everything from basic food items to manufacturing.

    Iranian: 'Our money is becoming more and more worthless every day'

    Ali answered reader questions about the impact of the sanctions in Iran earlier today.

    REPLAY the informative chat below. 

  • Israelis are prepared -- or not -- for an Iran attack

    Bernat Armangue / AP

    An Israeli woman talks on the phone after collecting gas masks for her family in a shopping mall in Jerusalem in this Aug. 22 photo.

    Martin Fletcher writes

    TEL AVIV – Did you know:

    See our full coverage on international hot spots crucial to U.S. foreign policy ahead of elections in our At the Brink series here. And on Sunday, Sept. 30, and Monday, Oct. 1, tune into special coverage on all NBC News platforms from NBC's team of anchors and correspondents deployed in five countries across the region.
    • If a bomb explodes near you with a little bang, that's a sign it is carrying chemical or biological weapons? A loud bang means a conventional warhead.
    • If an attack is chemical, you will know right away? But if it's biological you'll only find out after a few days.
    • If it is nuclear, you should lie down and cover your head? And don't get up when the first blast wave passes over you because it will be followed by a second wave.

    Useful, eh?

    All these facts are good to know if you are in Israel and war with Iran, and its proxies Hezbollah and Hamas, were to break out around you.

    Report: Iran mulls 'pre-emptive attack' against Israel; commander warns of 'World War III'

    Or if something happened with Syria, Iran's ally, which has large stockpiles of biological and conventional weapons.

    With the latest opinion polls showing that half of Israelis fear for the continued existence of their state if war breaks out with Iran, and with more than half rating the chance of such a war within a year as "medium" or "high,” the more you know about what the war would entail, the better.

    Here are some more facts:

    • If you suck a bead made of castor oil, it could kill you. It contains ricin, a lethal poison.
    • After Chernobyl, it took 25 years before Welsh sheep could be eaten because the nuclear radiation settled over Wales as it drifted most of the way round the world.
    • And cigarettes contain polonium 210, the poison used to murder the Soviet ex-spy Alexander Litvinenko.

    Probably no country in the world is as prepared as Israel for such an attack, with every home built in the last 21 years possessing a mandatory bomb shelter. City centers have vast public shelters with special rooms set up for non-conventional attacks. And citizens are instructed in how to protect their bomb shelters against chemical and biological warfare.

    Mistakes happen
    But mistakes can happen, as I can personally attest. 

    One evening in the winter of 1991 during the first Gulf War, with Iraqi Scud missiles rocketing over Jordan toward Israel, the bomb alarm sounded. My family quickly locked themselves in our bomb shelter, and I raced through the dark, silent streets to broadcast from our NBC News studio.

    Israel's Netanyahu: Draw 'clear red line' to stop Iran from getting nuclear weapons

    This had become routine. I spent all night in the studio, responding to the many alarms, and went home around 5a.m. I didn't check on the family because I knew where the Scuds had fallen and none were near my home.

    This one time, however, with 30 minutes to go before my next live broadcast hit, I had a sense that something was wrong. For the first time after an attack, I called home to see how my wife and my three sons, all aged below six, were faring.

    In an attempt to convey what he sees as a threat to Israel's existence, Israel's Prime Minister Benjamin Netanyahu used a cartoon to illustrate how close he says Iran is to developing a nuclear weapon. In a speech at the United Nations General Assembly he asked the world to help stop them. NBC's Andrea Mitchell reports.

    No answer. I called again. No answer. Twenty-five minutes to go before my next “live hit” on TV with Tom Brokaw. I felt sick with worry. What could have happened?

    I ran downstairs, jumped into my car and raced home. I figured a 10-minute drive, five minutes at home and 10 minutes back, I'd be in the studio with seconds to spare.

    Life-saving decision
    Ends up, because of that calculation, I saved my family's lives.

    When the all-clear sounded, my wife, our three sons, my sister-in-law and the dog, a schnauzer called Tofi, couldn't get out of the shelter.

    The heavy steel lock would not budge. They hung on it and pulled and tried and tried but could not open the door. When I arrived home, about two hours after they had entered the bomb shelter, I heard faint cries of "help, help."

    Instead of pushing the handle up, they had been pulling it down, locking it instead of opening it.

    Israeli Prime Minister Benjamin Netanyahu tells the UN general assembly Thursday that sanctions are not stopping Iran's nuclear program.

    I was able to open the door from the outside and all was well.

    But if I had stuck to my usual routine and not called home and just returned at 5 a.m., after leaving them at 8 p.m. the night before, they would have been dead.

    It's simple math: An adult breathes about one cubic meter of air per hour, children more. Five people in a small room of about nine cubic meters would begin to lose air after two hours. Seven hours? They'd have all been dead.

    A miracle? Sixth sense? Whatever, it's a warning of what can go wrong in times of stress. And however prepared Israelis are for what awaits them, accidents happen. When Iraq attacked Israel in 1991, far more people died of heart attacks than Scud rockets.

    Country on edge
    Since that time, every apartment built in Israel must have a blast-proof room that protects citizens from conventional blasts and also, with plastic and tape, can protect against chemical and biological weapons too. Walls and doors are approximately 8-12 inches thick and doors and windows are airtight.

    Every citizen has, in theory, a gas mask. In practice, there aren't enough to go around.

    Everybody asks, do you think there will be war with Iran? Nobody knows, and if you see Israel’s crowded cafes, the bustling streets, the crammed beaches, you may think that nobody cares.

    Yet Israel is a country on edge. Most seem to have bought Prime Minister Benjamin Netanyahu’s line that the price to pay to stop Iran from building a nuclear bomb is much lower than the price to be paid if Iran has the bomb.

    Fueling those thoughts are memories of what happened when the Nazis killed 6 million Jews. Today, there are approximately 6 million Jews in Israel. Few Israelis can argue against Netanyahu's insistence of: Never again.

    And yet, I don't know anyone here who has prepared their bomb shelter. They're all a mess, used to store boxes, suitcases, footballs and wine. They are used as computer rooms, bicycle storage, play rooms. The attitude is, for the most part, we'll worry about it when the time comes.

    Until then, live life.

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  • Israel's Netanyahu: Draw 'clear red line' to stop Iran from getting nuclear weapons

    In an attempt to convey what he sees as a threat to Israel's existence, Israel's Prime Minister Benjamin Netanyahu used a cartoon to illustrate how close he says Iran is to developing a nuclear weapon. In a speech at the United Nations General Assembly he asked the world to help stop them. NBC's Andrea Mitchell reports.

    Andrea Mitchell, NBC News writes

    NEW YORK -- Israeli Prime Minister Benjamin Netanyahu demanded that a “clear red line” be set to stop Iran from gaining a nuclear weapon, telling the U.N. General Assembly that with a nuclear Iran, no one in the world would be safe.


    In a speech at the U.N. Thursday, Netanyahu said that Iran will have enough enriched uranium to build a bomb by next summer. He said his "red line" to stop Iran from gaining nuclear weapons is to stop it from accumulating that uranium -- because it would impossible to know when Iran has achieved the next step: building a detonator to fire a weapon.

    At the U.N. podium, the Israeli prime minister showed a cartoon-like picture of a child's version of a bomb -- and drew a red line to illustrate his ultimatum.

    He said that he and Israel appreciated President Barack Obama's statement that the U.S. also would not let Iran get a bomb -- and that he is confident that together the U.S. and Israel can chart a path together.

    Palestinian leader: We seek 'nonmember' UN status 

    But he was very tough on Iran, reciting a litany of terrorism by Iranian proxies around the world and saying that given Iran's aggression without nuclear weapons, if it got nuclear weapons, who'd be safe anywhere?

    Richard Drew / AP

    Prime Minister Benjamin Netanyahu of Israel shows an illustration as he describes his concerns over Iran's nuclear ambitions during his address to the 67th session of the United Nations General Assembly at U.N. headquarters Thursday, Sept. 27, 2012.

    In his speech, he also compared a nuclear-armed Iran with a nuclear-armed al-Qaida -- and said the only way to prevent war is to draw that red line against Iran accumulating enough enriched uranium to create a bomb.

    Follow Andrea Mitchell on Twitter

    An August report by U.N. inspectors said Iran has stockpiled 91.4 kg (about 200 lbs.) of the 20 percent material.

    According to the U.N. nuclear watchdog, around 25 kg (about 55 lbs.) of uranium enriched to a 90 percent purity level would be needed for a single nuclear weapon.

    Israel, believed to have the Middle East's only atomic arsenal, sees a nuclear-armed Iran as a threat to its existence and has expressed frustration over the failure of diplomacy and sanctions to rein in Tehran's nuclear activity. Iran says it is enriching uranium only for peaceful energy purposes, not for nuclear bombs.

    Obama warned Iran on Tuesday in his speech to the General Assembly that he would do what it takes to prevent Tehran from getting nuclear arms and that "time is not unlimited" for diplomacy to resolve the issue.

    Iranian President Mahmoud Ahmadinejad said this week he did not take seriously the threat that Israel could launch a military strike on Iran's nuclear facilities.

    Reuters contributed to this report.

    Israeli Prime Minister Benjamin Netanyahu tells the UN general assembly Thursday that sanctions are not stopping Iran's nuclear program.

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  • Syria's embattled Assad appears on TV for first time in two weeks

    SANA via AFP - Getty Images

    A handout picture released Tuesday by the official Syrian Arab News Agency shows Syrian President Bashar Assad, right, meeting with Saeed Jalili, a top aide to Iran's supreme leader Ayatollah Ali Khamenei, in Damascus.

    NBC News and wire reports writes

    Updated at 8:31 p.m. ET: As Syrian President Bashar Assad appeared on television for the first time in two weeks on Tuesday, U.S. Secretary of State Hillary Clinton said that the high-profile defection of the Syrian prime minister increased the urgency of planning for the ouster of Assad's regime.

    In South Africa's capital, Pretoria, Clinton said the United States and other countries needed to make sure that Syrian state institutions remain intact once Assad loses his grip on power.

    "The intensity of the fighting in Aleppo, the defections, really point out how imperative it is that we come together and work toward a good transition plan," Clinton said.

    "I do think we can begin talking about planning for what happens next: the day after the regime does fall. I am not going to put a timeline on it, I can't possibly predict it, but I know it's going to happen as do most observers around the world," Clinton said.


    Clinton also warned against "proxies or terrorist fighters" being sent in to join the 17-month-old conflict.

    The escalating war in Syria has increasingly divided the region along its sectarian faultline, pitting the mainly-Sunni rebels, who are backed by regional Sunni-led powers Turkey and the Gulf Arab states, against Assad's government that is backed by Shiite Iran.

    In a possible sign of increasing American pressure on Assad’s government, Clinton's remarks come a day after three U.S. senators warned about the risks of American failure to provide assistance to Syrian opposition fighters.

    Clinton also spoke a day after the defection of Prime Minister Riyad Hijab, the latest in a string of high-level departures from the Assad regime.

    US makes plans to keep post-Assad Syria intact

    TV appearance
    Assad appeared on Syrian state TV on Tuesday meeting with Iran's Supreme National Security Council in Damascus.

    Assad's absence had fueled rumors about his health, including a hoax Twitter message Monday that quoted Russia's ambassador to Damascus as saying Assad might have been killed.

    Russian officials quickly denied the report.

    Three US senators warn about risks of inaction in Syria

    In the week after a July 18 bombing that killed four members of his inner circle, Assad was shown twice in silent footage on television, swearing in a new defense minister and meeting military officials.

    Slideshow: The lives of Syrian rebels

    NBC News

    People resisting the army of President Bashar Assad in northern Syria cope with loss and prepare for fighting.

    Launch slideshow

    During Tuesday's Damascus meeting, Saeed Jalili, head of Iran's Supreme National Security Council, said Iran would not let its close partnership with the Syrian leadership to be shaken by the uprising or external foes.

    "Iran will not allow the axis of resistance, of which it considers Syria to be an essential part, to be broken in any way," Syrian television quoted Jalili as saying.

    The "axis of resistance" refers to Shiite Iran's anti-Israel alliance with Syria's rulers - from the Alawite faith which is an offshoot of Shiite Islam - and the Lebanese Shiite militant group Hezbollah, which fought a month-long war with Israel in 2006, with Iranian and Syrian support. 

    Damascus and Tehran have held Sunni Muslim Gulf Arab states and Turkey, all allies of the United States and European powers, responsible for the bloodshed in Syria by supporting the overwhelmingly Sunni Muslim rebels. Western powers sympathetic to the rebels are concerned that anti-Western Sunni Islamists could benefit from a victory for the anti-Assad forces. 

    Iran's Fars news agency said Jalili told Assad that Iran was prepared to provide humanitarian aid to Syria. 

    As estimated 18,000 people have been killed in the Syrian conflict, as rebels battle government forces in an attempt to wrest control from the Assad family's four-decade grip on power.

    Watch World News videos on NBCNews.com

    On a fence-mending visit to Turkey, Iranian Foreign Minister Ali Akbar Salehi said he wanted to work with Ankara to resolve the crisis. Turkish Prime Minister Tayyip Erdogan described as "worrying" a comment on Monday by Tehran's top general, who blamed Turkey, Saudi Arabia and Qatar for bloodshed in Syria. 

    Iran has expressed fears for more than 40 Iranians it says are religious pilgrims kidnapped by rebels from a bus in Damascus while visiting Shiite shrines. Salehi wrote to U.N. Secretary-General Ban Ki-moon seeking his help to free them. 

    Rebels say they suspect the captives were troops sent to help Assad. A rebel spokesman in the Damascus area said on Monday three of the Iranians had been killed by government shelling. He initially said the rest would be executed if the shelling did not stop but later said they were being questioned. 

    At least 262 al-Qaida militants are now operating in the border area between Turkey and Syria and rebels say another group of fighters are living in a tented camp just outside Aleppo, Syria's largest city. NBC's Richard Engel reports.

    Fighting rages in Aleppo
    On Tuesday, rebels trying to fight off an army offensive in Aleppo said they were running low on ammunition as government forces encircled their stronghold at the southern entrance to the country's biggest city.

    Assad has reinforced his troops in preparation for an assault to recapture rebel-held districts of Aleppo after repelling fighters from most of Damascus.

    Related: Official: Syria PM defects to anti-Assad opposition

    "The Syrian army is trying to encircle us from two sides of Salaheddine," said Sheikh Tawfiq, one of the rebel commanders, referring to the southwestern neighborhood which has seen heavy fighting over the last week.

    Mortar fire and tank shells exploded across the district early Tuesday, forcing rebel fighters to take cover in crumbling buildings and rubble-strewn alleyways.

    Complete international coverage on NBCNews.com

    Tanks have entered parts of Salaheddine and army snipers, using the cover of heavy bombardment, deployed on rooftops, hindering rebel movements.

    Slideshow: Behind Syrian rebel lines

    Machine guns operated by motorcycle brakes? Get a glimpse at the rebels fighting against Assad's forces in Syria's mountainous Jabal al-Zawiya area.

    Launch slideshow

    Another rebel commander, Abu Ali, said snipers at the main Saleheddine roundabout were preventing the rebels from bringing in reinforcements and supplies. He said five of his fighters were killed on Monday and 20 wounded.

    But rebels said they were still holding the main streets of Salaheddine which have been the frontline of their clashes with Assad's forces.

    Journalist: British militants took me hostage in Syria

    A fighter jet pounded targets in the eastern districts of Aleppo and artillery shelling could be heard in the early morning, an activist in Aleppo said.

    "Two families, about 14 people in total, were believed killed when a shell hit their home and it collapsed this morning," the activist said. The house was one street away from a school being used by rebels, he said.

    Reuters, The Associated Press and NBC News' staff contributed to this report.

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  • Iranians feel the pain of sanctions: 'Everything has doubled in price'

    Ali Arouzi writes
    TEHRAN – The economy here is in shambles, according to Iranians, whether the government will admit it or not.

    The United States, the European Union and the U.N. have imposed tough economic sanctions against Iran –- blocking access to the international banking system and hurting sales of Iranian crude oil -– as a way to persuade Tehran to abandon its nuclear program. 

    In the short term, the harsh sanctions have had an impact on Iran’s economy -– inflation has gone through the roof, and the unemployment rate is staggering, especially among young Iranians. Prices of consumer goods have doubled, tripled, even quadrupled in some cases, according to consumers. 

    The business community is in disarray, and as things keep getting worse, it’s all people are talking about.

    Reuters

    CLICK ON THE GRAPHIC ABOVE TO ENLARGE THE IMAGE. Iran Sanctions: Key areas affected by sanctions imposed by the international community against Iran.

    Barely getting by 
    At the Tajrish Bazaar in North Tehran on a recent afternoon, Ahmed, a 31-year-old unemployed man, poured his heart out to me. Speaking on the condition of anonymity, as all those interviewed for this story did because of the political sensitivity of speaking out in Iran, he told me his story. 

    He said he has been unemployed for the past year, doing odd jobs, and that he barely makes enough to feed himself, let alone his wife and children. The lack of jobs and the extraordinary rise in food prices have hamstrung him. But he was most worried about what the crippled economy is doing to the youth of Iran, who he said are turning to crime and drugs if they can’t find work. 

    In Iran, appearance is everything. How you dress and wear your beard says a lot about your politics. 

    As I talked to Ahmed, who was dressed in Western-style clothes, another man looked on disapprovingly. He had a full dark black beard and was dressed in conservative black clothes. He was listening to everything Ahmed said and wanted to talk to us, although he declined to give us his name.

    He said that people like Ahmed were making excuses and were lazy. He argued that the economy had become tougher, but no more so than the Iranian people were used to over the years. He blamed the U.S. for the bad economy, accusing President Barack Obama of unfairly trying to squeeze Iran. But he said that in the end, the rough economic times had taught Iran to be more self-reliant. 

    “We need to tighten our belts for now and weather this storm with the West as we have always done. And we will be victorious again,” he said.

    NBC's Ali Arouzi reported from Istanbul, Turkey in April during the most recent meeting between world leaders and Iranian representatives to discuss Iran's nuclear intentions.

    New sanctions' real impact
    The most recent international sanctions have targeted Iran’s crude oil and banking sectors. In addition to harsh U.S. measures, 27 countries in the European Union agreed in January to ban Iranian oil imports –- giving countries until July 1 to terminate their deals. They also put a freeze on assets belonging to the Central Bank of Iran and a ban on trade in gold and other precious metals.  

    Anthony Cordesman, who holds the Burke chair in strategy at the Center for Strategic and International Studies and is a long-time Iran watcher, said that despite years of sanctions against Iran, the most recent ones have had the greatest impact –- partly because they target banking.

    The banking sanctions “have had the most popular, or broad, impact. Right now Iran can’t even operate on the international clearinghouse.”   

    “I think that this is the first time that sanctions have really had a major bite. Up to now, they have all been fairly limited,” said Cordesman.  “But beginning in November, and it’s just beginning to bite, you can’t bank internationally effectively, you can’t move money. You don’t have a stable conversion rate –- but the rial [Iran’s currency] is way down, so your savings are of very uncertain value unless you’ve invested in property.  You don’t know what’s going to happen to your business. You have to be very cautious about how much money you can spend on a marriage for your children or their education.” 

    He added that we really won’t begin to see the full impact of the sanctions until summer, when they have all gone into effect.  “So everyone knows it’s getting worse, but no one knows yet how serious.” 

    Vali Nasr, the incoming dean     at the Johns Hopkins School of Advanced International Studies, explained how these sanctions differ from 30 years of sanctions that mostly targeted imports into Iran. 

    Slideshow: Everyday life in Iran

    At schools, in shops, and on the streets of big cities and small towns, daily life plays out in Iran.

    Launch slideshow

    “The new set of sanctions targeting Iran’s oil industry, central bank, ability to conduct international financial transactions, are of a different nature largely because they are going after the government’s source of income –- the ability to sell oil or receive money for oil,” said Nasr. “So these have had an impact because they have caused extensive inflation inside Iran. They’ve caused the government to scrap a variety of projects, which has caused unemployment.  

    “There is no doubt that economic hardship has become much more pronounced. And there is on top of that a layer of uncertainty. So there is significant economic hardship that is hitting the lower rung of society and the Iranian middle class,” said Nasr.
     
    Back in Tajrish Bazaar, Roya, a well-dressed woman in her 60s wearing a Hermes scarf for a hijab and carrying a Louis Vuitton bag, explained how even she is being hit by the economic uncertainty. While she is a wealthy Iranian living in the leafy suburbs of affluent North Tehran, she said her purchasing power has been halved by the struggling economy. 

    “Everything has doubled in price,” Roya said. “My son lives in Los Angeles, and it’s cheaper to go shopping there -- amazing. Things have become difficult for me even though I am among the better off Iranians. I can’t imagine how difficult it is for folks downtown.” 
    When I asked her what the solution was, she replied sarcastically, “That’s for the country’s economists to figure out.”

    Close to the bone
    For international relations analysts, like Cordesman and Nasr, getting reliable information on what’s going on in Iran is very difficult. Both analysts said that basically all of their information on the impact of the current sanctions is anecdotal. 

    “You have to rely on anecdotal information especially because the Iranian government does not have an interest in revealing how painful the sanctions are. They may admit that they are hurting, but they don’t want to put numbers out there,” said Nasr. 

    But it’s not all doom and gloom for the regime. President Mahmoud Ahmadinejad often touts during public events that Iran has a record $90 billion in foreign exchange reserves, as well as untold reserves of gold, silver and precious stones. 

    Even though experts estimate that Iran has seen a decline in sales of about 300, 000 barrels of oil per day as a result of the sanctions, this has been offset by a 15 percent rise in crude prices. 

    And the effect and pain of sanctions have not been distributed evenly. While blue-collar workers in downtown Tehran can expect to eat meat once a month only as a treat, North Tehran is awash with Mercedes and Porsche SUVs costing as much as $500,000 after the import tax has been paid.    

    Will the sanctions achieve goal?
    So the question remains as to whether the sanctions will achieve their goal: curtailing Iran’s nuclear program.

    “The sanctions have had an impact of getting Iran to the negotiating table. Iran came to Istanbul [the site of the latest diplomatic talks] with much more seriousness than in the past,” said Nasr. 

    But he added that the sanctions alone won’t be enough for Iran’s leaders to give up a program they have invested heavily in –- both financially and in terms of building the nuclear program as a point of national pride.  “Just because the Iranian public dislikes this regime –- that does not mean that they dislike the nuclear program. They don’t see this as the regime’s nuclear program, they see it as Iran’s nuclear program,” said Nasr.  

    In order for the sanctions to work, Nasr explained, the U.S. and other parties at the table need to give something back -– otherwise it would just seem like Iran is surrendering to the West’s demands, not an easy sell at home. 

    “Until now, the whole approach has been stick-heavy and carrot-poor. And the sticks are very explicit and the carrots are vague. And maybe that was necessary to get their attention and to show that we meant business. But now going forward -– [the U.S.] can’t ask [Iran] for concrete concessions –- like stop this, stop that -– but not put concrete things on the table, like this sanction will be lifted.  If all the concessions are on the Iranian side and what they get is just a promissory note, I don’t think it will fly.”   

    “End of the day, these two countries have not had a single thing they’ve agreed on or done together in the last 30 years. So you couldn’t expect them to actually be able to conclude a deal without some sort of reciprocal, trust-building, concrete steps going forward.”

    Msnbc.com’s Petra Cahill contributed to this report. 

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  • Fears grow of Israel-Iran missile shootout

    Iran's Revolutionary Guards test fire a missile during military maneuvers at an undisclosed location Sept. 27, 2009. The maneuvers were aimed at

    Robert Windrem writes

    With tensions between Israel and Iran running sky high over the latter's nuclear program, U.S. officials and military analysts are growing increasingly concerned that Israel will launch a multi-phase air and missile attack that could trigger waves of retaliatory missile strikes from Tehran.

    Such a shootout could quickly spiral into a regional conflict that would potentially force the U.S. to intervene to protect its interests.

    The emerging consensus among current and former U.S. officials and other experts interviewed by NBC News is that that an Israeli attack would be a multi-faceted assault on key Iranian nuclear installations, involving strikes by both warplanes and missiles. It could also include targeted attacks by Israeli special operations forces and possibly even the use of massive explosives-laden drones, they say.

    The Iranian response to such an attack is uncertain, but many experts and officials believe it is likely to include retaliatory missile strikes. Iran has more missiles in its arsenal than Israel, according to some estimates, and has the capability of striking targets in most Israeli population centers.

    "I think that it would strike Iran as a reasonable response, an eye for an eye," said Christopher J Ferrero, a professor of diplomacy at Seton Hall University in New Jersey and an expert on Middle East missile forces.

    He also said Iran would likely attack major cities with its Shahab 3 missiles, which he said are not as accurate as the Israeli missiles, but would be an effective "instrument of terror … that could certainly cause significant damage to heavily populated suburban and urban areas.

     

     

    Israel possesses advanced anti-missile defenses, but those systems could be overwhelmed if Tehran launched large numbers of missiles, as Ferrero expects.

    Reuters

    The Center for Strategic and International Studies outlines these options for an Israeli strike on Iran. Click the image for the full-size chart.

    Given the immense difficulties in carrying out successful air strikes on the four key Iranian installations using its warplanes alone -- as laid out last week by the New York Times, U.S. officials say Israel would be likely to coordinate such airstrikes with waves of missiles. This would greatly increase the chances of penetrating fortifications that Iran has built to protect some of its key installations and overwhelm Iran's air defenses, said the former and current U.S. officials, who spoke on condition of anonymity.

    "Two words:  Jericho missiles," said one former White House and Pentagon official, speaking on condition of anonymity, when asked how Israel would attack Iranian targets at great distances. "They are conventionally armed, have a very small CEP (circular error of probability, meaning they are highly accurate) and can be used in conjunction with a strike fighter operation."

    Israel has as many as 100 Jericho ballistic missiles – both short- and medium-range – as well as submarine-launched cruise missiles, though the officials say they believe the latter are unlikely to be used. The short-range Jericho I missiles would be of no use in an attack on Iran, because the targets are far beyond its 300-mile range. However, the  medium-range Jericho II's are capable of  hitting targets as far as 900 miles away – or as far east as Tehran. Israel also tested a Jericho III intercontinental ballistic missile in 2008 and Israeli media have reported that it may have deployed one or more of the weapons, which would put all of Iran within reach.

    The missiles would most likely be launched from the Hirbat Zekharyah missile range, midway between Israel and the Mediterranean Coast, according to "Critical Mass: the Dangerous Race for Superweapons in a Fragmenting World," by William E. Burrows and Robert Windrem, and various Israeli press reports.

    Although designed to be part of Israel's nuclear deterrent force, the Jerichos can be equipped with high explosives as well as nuclear warheads. U.S. officials have said that an Israeli attack, if it happens, would be intended to surgically take out the nuclear facilities, not inflict the mass casualties that would result from a nuclear attack.

    Related coverage:
    Israel teams with terror group to kill Iran's nuclear scientists, U.S. officials tell NBC
    Panetta report fuels concerns that Israel will attack Iran

    Iran has no capability to defend against a missile strike, said Ferrero, the expert on Middle East missile arsenals.

    "If the Jerichos are accurate enough to get to their targets, they will get to their targets," he said.

    What Iran does have is hundreds of Shahab 3 medium range ballistic missiles, according to U.S. estimates. The Shahab 3 also has a range of roughly 900 miles.

    Israel, possibly supplemented by U.S. shipborne anti-missile systems – the Aegis Standard Missile-2 -- could intercept and destroy some of the incoming Iranian missiles, said Ferrero. But the numbers favor Iran, he said.

    "I believe that (the Iranians) have a sufficient inventory that they could overwhelm those missile defenses and still get enough missiles through to cause damage," he said.

    The critical factor may be the number of  missile launchers in Iran's inventory, Ferrero said, because penetrating Israel's defenses would require numerous  missiles, but also enough launchers to be able to fire them off simultaneously. That number is a closely guarded secret, he said.

    Additionally, U.S. intelligence estimates say Iran has supplied Hezbollah with more than 40,000 short-range rockets and missiles since 2006. However, U.S. officials are uncertain whether Hezbollah would follow Iranian orders, and risk Israeli retaliation or, if they did, how many they would fire.  The majority of the rockets and missiles are unguided.  Israel and the U.S. have worked on a short-range missile defense system called Iron Dome, but there are concerns that waves of attacks could overwhelm the system.

    Also open to question in U.S. and Israeli military circles is whether an Israeli attack would meet its objective: setting back the Iranian nuclear program anywhere from two to five years.

    U.S. officials say Israel would be likely to concentrate its attacks on four key Iranian nuclear complexes. Key facilities within those complexes – the Natanz and Fordo centrifuge facilities, both south of Tehran; the Arak research reactor, southwest of Tehran; and a uranium hexafloride production and research facility near the city of Isfahan – are protected by heavy fortifications, they said.

    The Jerichos are stored in tunnels in limestone formations around Hirbat Zekharyah and rolled out for firing. They would likely be used as part of a one-two punch, the officials say. The first attack would be carried out by Israeli strike fighters and would be intended to breach the heavily fortified outer ceilings of the facilities. The second (and possibly even third) wave would be missile attacks aimed at destroying the facilities within, the officials said. 

    Asked if Jerichos would have the accuracy and the explosive power to take out hardened bunkers or fortifications believed to be protecting Iran's most-sensitive underground nuclear facilities, a current U.S. official replied, "You would be surprised at their accuracy." The official added that the missiles' warheads would contain a special mix of explosives that could penetrate the Iranian defenses.

    U.S. officials also say Israel may have learned the location of facilities that fabricate centrifuge components. These, too, could be targeted.

    A 2010 book on the possibility of an Israeli attack laid out the difficulties Israel would face if it attempted to use only its strike fighters on those targets.

     "Attacks against the sites at Natanz, Isfahan and Arak alone would stretch Israel's capability and planners might be reluctant to enlarge the raid further," wrote authors Steven Simon and Dana H. Allin, in "The Sixth Crisis – Iran, Israel and the Rumors of War." Simon, then a fellow at the Council on Foreign Relations, now heads the Middle East Desk at the National Security Council.

    The biggest problem is the fortification of the two centrifuge facilities. Simon and Allin describe the challenge using aircraft only.

    "Natanz is the only one of the … likely targets that is largely underground, sheltered by up to 23 meters (75 feet) of soil and concrete," they wrote. "… Bombs used in a ‘burrowing' mode, however, could penetrate deeply enough to fragment the inner surface of the ceiling structures above the highly fragile centrifuge arrays and even precipitate the collapse of the entire structure."

    But for the attack to have high odds of success, they argue, aircraft would have to drop additional bombs into the cavities created by the first bombs. That would require "time on target" -- a luxury that the Israeli jets at the outermost limits of their 1,100-mile range would likely not have. While they estimate the success rate of such a plan at "better than 70 percent," they call it "complicated and highly risky."

    Another difficulty for attacking Israeli aircraft would be finding a route to the targets that could be flown covertly or with the tacit approval of Sunni Arab states, who are at least as frightened of an Iranian nuclear capability as the Israelis.

    Simon and Allin (and others) have written that there are three "plausible routes" that Israeli warplanes would take to attack Iran: a northern approach, likely along the Syrian-Turkish border; a central path that would take them over Jordan and Iraq; and a southern route that would transit the lower end of Jordan, Saudi Arabia and Kuwait. The southern route is the most likely, U.S. officials suggest, because the Saudis and other Sunni-dominated Gulf states are eager for someone to take out the Iranian threat. They prefer the U.S. do it, but have reportedly shared intelligence on the Iranian program with the Israelis, if only on a limited basis, according to the U.S. officials.

    No matter what route the fighter bombers take, they would use what one U.S. official described as "high-low, low-high" flight paths – flying high first to increase fuel efficiency, then low for most of the trip to evade radar, then climbing high again as the bombs are released in what is known as a "flip toss" from as far as 10 miles from the target.

    The Israelis would be prepared to lose aircraft if necessary, the officials said.

    Although Simon and Allin do not discuss adding a missile component, other experts, including many current and former U.S. officials, believe the Israelis already have made a decision to have them in the attack menu.

    Missile attacks would be coordinated with fighter-bomber attacks (presumably, the Israelis' F-16, F-18 and extended-range F-15I Strike Eagle). The missiles would have to be launched so that warheads strike targets following the strike fighter attacks.  Because of the short flight time, minutes rather than hours in the case of the aircraft, the missile launch would almost certainly take place at the last possible moment to ensure the secrecy of the overall attack.

    The Israelis are not planning to use their submarine-launched cruise missile force -- "not enough of them," one official said of the subs. (The Israelis have long had nuclear tipped sub-launched cruise missiles as part of their deterrent force.) 

    Beyond the strike fighters and the missile force, U.S. officials suggest the Israelis could use two other "weapons" against Iran.

    The first is special operations forces that would be secretly inserted into the country. At the least, they could be employed to illuminate aim points for laser-guided bunker-busting bombs. At the most, they could launch their own attacks on facilities, particularly those believed to contain enriched uranium.

    The other is a new generation of large drones with wingspans approaching those of a Boeing 777  (almost 200 feet). Costing $30 million each, the Heron drones are capable of remaining airborne for 40 hours at a time and have a range of 4,600 miles. While they can be equipped with surveillance and electronic warfare equipment, some officials call them "strike drones," meaning they could be loaded with explosives and used to attack Iranian targets.

    While the initial days of an Israeli-Iranian conflict would probably be bloody, most experts say that the open warfare would be expected to wind down within days or weeks, since neither side has the ability to occupy the other's territory or enough missiles to sustain attacks.

    But that would bring with it its own set of problems, as the conflict would be likely to continue on a lower level, involving covert operations and terrorism.

    "You could have a very nasty covert war emerge," said Ferrero.

    Robert Windrem is a senior investigative producer for NBC News.