New U.S. Sanctions Draw Iranian Ire

Despite the government's insistence that U.S. and U.N. sanctions aren't causing any pain, some leading Iranians have begun to say publicly that the pressure does hurt. And on Tehran's streets, people are increasingly worried over the economic pinch.

The sanctions have heightened resentment of the United States among some in the public. But they are also fueling criticism among Iranian politicians that President Mahmoud Ahmadinejad is mismanaging the crisis with hard-line stances that worsen the standoff with the West.

Washington announced new sanctions Thursday, targeting Iran's elite Revolutionary Guards, which the U.S. accuses of supporting terrorism by backing Shiite militants in Iraq. The sanctions ban U.S. dealings with the extensive network of businesses believed linked to the Guards - and put stepped-up pressure on international banks to cut any ties with those firms.

The reaction from Ahmadinejad's government was familiar. CBS News reporter Larry Miller says the regime called the measures illegal under international law, and said they were "doomed to failure".

The chief of the Revolutionary Guards shrugged off the sanctions, saying "the corps is ready to defend the ideals of the revolution more than ever before."

"They have applied all their efforts to reduce the efficiency of this revolutionary body," General Mohammad Ali Jafari said Thursday, according to the state news agency IRNA.

The sanctions come at a time when Iran's economy is struggling, with dramatic price rises this year. The costs of housing and basic foodstuffs like vegetables have doubled or even quadrupled. The government also has imposed unpopular fuel rationing in an attempt to reduce expensive subsidies for imported gasoline.

Word of the U.S. move angered people in Tehran.

"The sanctions will damage us, our children and our people and not the government. Prices of everything increased up to double after former sanctions by the U.N.," said Morteza Morovvati, a 45-year-old teacher. "Who in the world and the Iranian government is going to care about ordinary people?"

Hashem Nazari, a retired clerk for an electricity equipment company, said that even before the new U.S. sanctions on some Iranian banks, his son living in Germany could not send him money through the banks.

"For the past two months, he has sent me money through private money exchangers," Nazari said.

Still, much of the anger appeared focused at the West.

"This will be another step by (President) Bush toward igniting war in the region," Mansour Rasti, 28, a graduate student in political science, said of the new sanctions.

Marzieh Aghai, a 37-year-old government bureaucrat, said she would support her country no matter what. "They (the Americans) don't know the Guards. We are proud of them."

Ahmadinejad and his allies are likely counting on sanctions to rally Iranians against the United States.

"Hard-liners in Tehran were looking forward for the sanctions. It helps them hide their incompetence behind the embargo," said political commentator, Saeed Laylaz.

CBS News senior White House correspondent Bill Plante said there is no guarantee the new sanctions will have the effect desired by President Bush.

In a report Friday for CBS News' Early Show, Plante pointed to previous U.S. attempts to change another nation's policy or leadership through sanctions; 45 years of measures against Cuba, 10 years against Myanmar, and a battery of policy against Saddam Hussein - all of which failed in their objective, and sometimes caused civilian populations huge grief without altering the behavior of leaders.

"The new U.S. sanctions against Iran are just the latest in a string which goes back to the 1980s, all of which the Iranians seem to have shrugged off," said Plante.

Richard Haas, President of the Council on Foreign Relations, told CBS Evening News anchor Katie Couric

But, the new sanctions could worsen Ahmadinejad's political woes. Many conservatives who once backed him have joined reformers in criticizing Ahmadinejad. They point to his failure to fulfill promises to repair the economy - despite increased oil revenues - and say his fiery rhetoric goads the West into punishing Iran.

Stuart Levy, the Undersecretary for Terrorism and Financial Intelligence at the Treasury, defended the new, "targeted, narrow, conduct-based sanctions we're currently imposing".

Levy told CBS News the measures were "much, much more powerful, much more effective," than previous unilateral sanctions used by the U.S. government.

Ahmadinejad's sudden replacement of Iran's top nuclear negotiator with a close loyalist over the weekend also angered many conservatives in parliament.

Worry over sanctions has been increasingly expressed by figures high up in Iran's clerical leadership. Earlier this month, Hasan Rowhani, who sits on two powerful cleric-run bodies, the Experts Assembly and the Expediency Council, said that "the economic impact is felt in the life of the people." He said Ahmadinejad has just been making more enemies for Iran.

On Sunday, Ahmadinejad's predecessor as president, Mohammad Khatami, a reformer who remains influential, complained that Ahmadinejad claims "problems have been resolved but we see that problems remain unresolved."

The Bush administration hopes its new sanctions will push companies around the world to cut their business ties with Iran. "It is increasingly likely that if you are doing business with Iran you are doing business with the IRGC," Treasury Secretary Henry Paulson said, referring to the Guards.

Miller reports that Nicholas Burns, the third-ranking official at the State Department, admonished Russia to stop selling weapons to Iran and China to stop investing capital in the Islamic Republic. Burns spoke in an interview with a British radio station.

Meanwhile, the head of Iran's elite Revolutionary Guards dismissed the possibility of a U.S. military action against Iran and warned that his forces would respond with an "even more decisive" strike if attacked, an Iranian news agency reported Friday.

Asked about the possibility of an American strike on Iran, Gen. Mohammad Ali Jaafari told reporters late Thursday, "These words are just exaggerations, and I don't consider them a threat," the news agency ISNA reported.

"The Islamic Republic has the strength and power of its people's faith. This power is joined with experience, knowledge and technology in the realms of defense. The enemy knows it cannot make any mistake, so these words are just exaggeration," he said.