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Last Updated: Thursday, 25 October 2007, 20:24 GMT 21:24 UK
Iran sanctions offer mixed impact
By Jon Leyne
BBC Tehran correspondent

Iranian President Mahmoud Ahmadinejad
The move could strengthen hardliners close to the president
The sanctions announced by the United States could have a major impact on the already shaky Iranian economy, but the political effect is likely to be more mixed.

The Revolutionary Guard Corps is thought to control up to one-third of the economy through a series of subsidiaries and trusts.

For example, it is believed to have the contract to run Tehran's new Imam Khomeini airport.

Already American unilateral sanctions on just two banks have helped to isolate the whole Iranian financial system.

The reason for that is that the sanctions spread like a virus.

International companies are afraid of dealing with any of the sanctioned entities or anyone who might have had dealings with them, for fear of economic retaliation from the US.

But the political impact could be counter-productive, certainly in the short term.

It is likely to strengthen the hand of hardliners around President Mahmoud Ahmadinejad and provoke more expressions of defiance, especially coming just days after the chief nuclear negotiator, Ali Larijani, was replaced by Saeed Jalili, a close ally of the president.

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