In a post I did here a couple of years ago, I made the offhand remark that while the Saudis may have us over a barrel, we have them over a loaf of bread, which takes more profound effect a lot faster. It would appear to be the case in Iran.
PARIS/TEHRAN (Reuters) – Iran is turning to barter – offering gold bullion in overseas vaults or tankerloads of oil – in return for food as new financial sanctions have hurt its ability to import basic staples for its 74 million people, commodities traders said Thursday.
Difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad’s economic policies.
New sanctions imposed by the United States and European Union to punish Iran for its nuclear program do not bar firms from selling Iran food but they make it difficult to carry out the international financial transactions needed to pay for it.
Reuters surveys of commodities traders around the globe show that since the start of the year, Iran has had trouble securing imports of basic staples like rice, cooking oil, animal feed and tea. Grain ships have been held at its ports, refusing to unload until payment can be received for cargo.
With Iran’s rial currency tumbling, the prices of rice, bread and meat in Iranian bazaars have doubled or more in dollar terms in recent months.
Iranian grain importers have in the past side-stepped sanctions by booking business through the United Arab Emirates, traders said, but this option was cut off by the UAE government in response to sanctions.