Iran vows to resist sanctions 'warfare'

TEHRAN, Iran – Iranian officials unleashed sharper attacks against tightening Western sanctions Tuesday, equating the financial pressure to "warfare" and vowing to counter by retooling the country's oil-dependent economy.

The defensive remarks from President Mahmoud Ahmadinejad and the head of Iran's central bank appear to reflect two sides of the economic squeeze on the country: Growing anxiety about the drain from sanctions and high-level efforts to find ways to ride them out.

Ahmadinejad's remarks came after Congress pressed ahead late Monday with a new package of sanctions on Iran, expanding financial penalties and further targeting Tehran's energy and shipping sectors in the hope that economic pressure will undercut the country's suspected nuclear weapons program. Iran denies it seeks atomic weapons, saying its nuclear activities have aimed at power generation and cancer treatment.

Iran has managed to overcome U.S.-led embargoes and other attempts at economic isolation with self-sufficiency moves such as developing domestic industries and emphasizing high-tech advances including an aerospace program. But the current sanctions are hitting Iran in its most vulnerable spot — its vital oil exports — and are forcing major reassessments within a nation that was recently OPEC's No. 2 exporter.

Ahmadinejad, speaking at an expansion of an oil refinery facility in Tehran, echoed calls for Iran to move away from crude oil export as its mainstay and heavily invest in networks to produce car-ready fuels and other petrochemical products. A similar call was made earlier this week by Supreme Leader Ayatollah Ali Khamenei.

Their comments mark an indirect acknowledgment that oil exports — accounting for 80 percent of Iran's foreign revenue — are a weak link now targeted by Western sanctions seeking to rein in Iran's nuclear program. The drop in oil sales from sanctions also means less money to buy the fuel and other products needed for consumers and businesses.

Officials are particularly worried about potential shortages of some food items and protests with elections for Ahmadinejad's successor less than 11 months away. Local media have been warned against reports on the sanctions' fallout that could "harm" national interests. The government also has already begun to stockpile needed foodstuffs such as wheat, meat, sugar and cooking oil.

Ahmadinejad called the sanctions "political warfare" seeking to deny Iranian oil to an energy-hungry world.

"It's very funny. They (the West) use oil as a political weapon against a country that is an oil producer itself," Ahmadinejad said in a speech broadcast on state TV.

The 27-nation European Union — which once accounted for around 18 percent of Iran's oil exports — stopped all contracts with Tehran on July 1. Meanwhile, the U.S. is pressuring Iran's key Asian oil customers such as India and South Korea to look to the Gulf and other suppliers.

"The ones that need oil use what they need as a tool to pressure (others)," Ahmadinejad said. "We should move toward a point in which we would not export crude anymore."

Such a goal, however, would likely take decades and huge investments to transform an economy based on oil exports.

The central bank governor, Mahmoud Bahmani, was quoted as describing sanctions as "no less than a military war" and said Iran must respond with its own "asymmetrical" economic countermeasures.

The report on the official IRNA news agency said a special headquarters has been set up coordinate efforts to fight back against the sanctions.

A further blow to Iran has been stagnant oil prices, which have cut into revenues among its shrinking number of customers in Asia and elsewhere.

In Tehran, however, Iran's oil minister said there is no need for an additional OPEC meeting to discuss oil prices. A report by the semiofficial Mehr news agency quoted Rostam Ghasemi as saying the current price does not merit an extraordinary meeting of the oil-exporting cartel.

Ghasemi said $100 per barrel seems like a "fair" price. Benchmark crude drifted above $90 a barrel Tuesday in electronic trading on the New York Mercantile Exchange.

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Murphy reported from Dubai, United Arab Emirates.