This is doubtless a costly and time-consuming game for Iran as well, but as long it buys time and maintains its impetus, its rulers care little about costs. Except that Iran is running out of time—because of sanctions. Despite all the evidence to the contrary, the regime is heading for disaster. Since the EU enacted a partial oil embargo backed by tough US sanctions, Iran's oil revenues have dwindled by more than 40 per cent.
As if this were not enough, increasingly tight financial sanctions that targeted the vast majority of Iran's banking sector all the way up to the Central Bank are crippling its economy. Iran's manufacturing is plunging. The country is getting ever closer to the point where it cannot honour international payments. Its government will soon find that even printing money no longer works. Though Iran can still sell oil on the international market and it still holds considerable foreign reserves, the regime is finding it harder and harder to access its money and to move it around freely.
Its agents may still be running money-laundering networks and procuring technology, but the billions deposited by the Central Bank in foreign accounts are no longer accessible. Even when money is available, it comes with burdensome restrictions because Iran cannot find banks that will process its revenues in hard currencies.
With hyperinflation at the doorstep and the currency in free fall, Iran has resorted to hoarding gold. Meanwhile, its wealthy elites—including those closest to the regime—are transferring money abroad in suitcases. The government has established a three-tier exchange rate system to enable companies engaged in foreign trade to afford payments for vital merchandise. Yet the system is already giving way to cronyism. Shortages of basic commodities caused by mismanagement and corruption are being blamed on the regime.
