Iran Shrugs Off Threat of Sanctions

Day after day, Iranians shrug off the prospect of U.N. sanctions, Washington's key threat against Iran's unwillingness to abandon nuclear ambitions — and for good reason: Tehran has powerful friends with keen financial interests in blocking such punishment.

But even if Iran cannot secure a Russian or Chinese veto of any attempt at imposing U.N. Security Council (search) sanctions, it has weathered an American embargo for 25 years. Many Iranians, while acknowledging some pain, credit the U.S. embargo with making them more self-reliant.

A Foreign Ministry spokesman, exasperated by repeated warnings for Iran to end its nuclear ambitions or face U.N. sanctions, said recently that "we don't know with what language to tell the Europeans and Americans that Iran is not afraid of the U.N. Security Council."

"We have been subject to sanctions in the past," Hamid Reza Asefi added. "In the short term, it has put us under pressure. But in long term, it has helped our economy to flourish."

Before the 1979 Islamic revolution, Iran's greatest pride was assembling the Paykan automobile. Today, its products include passenger planes, missiles and cars. And while it has struggled with inflation unofficially estimated at 27 percent and an unemployment rate believed as high as 25 percent, huge oil and gas reserves have kept the economy afloat.

Business is brisk in Tehran's crowded bazaars, where shoppers pack stores and streets are jammed with bumper-to-bumper traffic. Despite a protracted power struggle, living standards have greatly improved since U.S. sanctions were imposed in 1979.

Then, families struggled to make ends meet. Today, Iranians spend on new cars and holidays at home and abroad and youths follow the latest Western trends.

Iran gradually has opened its market and reached out to non-American partners. Those ties could pay off if the United States calls for U.N. sanctions. Even if Iran's case is brought before the Security Council, China's energy interests in Iran coupled with its veto power could be a formidable force to overcome.

China reported signing a memorandum of understanding in October to buy $70 billion worth of liquefied natural gas from Iran over 30 years. A week later, Chinese Foreign Minister Li Zhaoxing, during a visit to Iran, said China was opposed to referring Iran to the Security Council over its nuclear program.

Russia, another veto-wielding member of the Security Council, has invested heavily in Iran's nuclear program. With promises of more contracts, it is unlikely to agree to international sanctions without a fight.

Russia has said it will continue its nuclear cooperation with Iran despite American pressure to stop, adding that it is certain Iran's aims are peaceful — producing an alternative fuel source and not acquiring a nuclear bomb as Washington maintains.

"China clearly is opposed to sanctions against Iran, and Russia is reluctant to support sanctions," said Iranian political analyst Davoud Hermidas Bavand.

Until recently, the United States said that while it would pursue diplomatic means to persuade Iran to give up its nuclear program, it was not prepared to take the military option off the table.

But after Europe made clear it would not support the use of force against Iran, Washington changed tactics, toned down the rhetoric and agreed to offer Tehran economic incentives in return for permanently freezing its nuclear program.

President Mohammad Khatami (search) has said no incentives exist that would persuade Iran to give up its program. Negotiations with European powers are going slowly. The latest round began a week ago and was scheduled to end Friday.

Iran admits the U.S. sanctions have set it back but says they have not blocked its economic and scientific advancement.

The sanctions, renewed in March, ban the export of advanced technology to Iran and are partly blamed for a string of Iranian plane crashes. Tehran has been forced to supplement its fleet of aging Boeing and European-made Airbus airliners with planes bought or leased from the former Soviet Union.

There have been several major plane crashes over the past two years, including one in 2003, when a Russian-made Ilyushin plane crashed in bad weather into a mountain in southeastern Iran, killing about 300 members of the elite Revolutionary Guards.

In 2002, Iran's transportation minister at the time, Ahmad Khorram, told parliament that Iran's air industry had reached "a crisis point" and was suffering from U.S. sanctions. Later that year, the first Iranian-made passenger plane went into service.

The twin-propeller Iran-140 (search), assembled in Iran with Ukrainian technology, is produced in Isfahan and is a source of Iranian pride. Three Iran-140s, with 52-passenger capacities, are flying domestically; aviation officials say a dozen more will join the Iranian fleet within five years.

Iranian political analyst Saeed Leylaz noted Iran's defense industry also has made strides despite international sanctions.

In July 2003, the Revolutionary Guards were equipped with the Shahab, or Shooting Star, a medium-range missile that can carry a nuclear warhead and reach Israel and various U.S. military bases in the region.

Before the revolution, "Iran was a net importer of weapons," Leylaz said. "Sanctions forced Iran to produce its defense requirements locally. Now, it's even an exporter of weapons."

Iran sells guns, rifles and tank parts, rocket launchers, mortars and mortar launchers to more than 60 countries. It refuses to say which ones.