The Latest from Iran (18 February): The Issue is the Economy

See also Iran 1st-Hand: "Almost Everybody is Under Financial Pressure"
The Latest from Iran (17 February): The Political Battle

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President Ahmadinejad Sees a Nuclear Project1355 GMT: Sanctions Watch. The Lebanese newspaper Al-Mustaqbal has claimed that transactions between Lebanese and Iranian banks have been stopped because of US and European Union sanctions.

1345 GMT: Political Prisoner Watch. Physician and blogger Mehdi Khazali, sentenced to 14 years in prison, has been on hunger strike for 40 days. Activists have translated and released his letter to his wife:

It’s difficult, so difficult, to see your wife and children cry and mourn for your self-chosen slow death, and you witness them mourning you....

It’s difficult to control yourself. You cannot see their sorrow and agony and not cry and cry yourself. But you have to be careful for this love and tears not to become a hindrance and shackles....

We must become like a roaring flood that uproots tyranny and oppression. So come and let us cry and cry together; these tears will uproot tyranny.

1315 GMT: Bank Fraud Watch. At today's trial over the $2.6 billion bank fraud, the prosecution separated the 32 defendants into six groups:

1) the main companions of the central figure, Amir Mansour Khosravi, involved in all crimes such as forging and using documents, exchanging lines of credits, establishing fraudulent companies, transferring money, and buying property;
2) companions of Amir Khosravi active in the cases;
3) people who acted for Amir Khosravi as brokers;
4) management of companies who demanded faked lines of credit;
5) employees of the Amir Mansur Investment Group involved in embezzlement, receiving large payments to handle illegal affairs;
6) members of management and credit and supervisory departments of banks, who neglected their duties or dissipated funds as government employees.

Khosravi said he had spent 6 1/2 months in prison but had had only two hours to talk to his lawyer. The lawyer said he had had no chance to read the complaint.

Khosravi, according to the report, admitted that he had paid a $3 million bribe to Mahmoud Reza Khavari, the former head of Bank Melli who has fled to Canada, but added that he did not want to commit treason.

1155 GMT: The Battle Within. Mojtaba Zolnour, the Supreme Leader's former representative to the Revolutionary Guards, has said the "deviant current" is a bad tumour whic must be treated with chemotherapy.

1135 GMT: Bank Fraud Watch. As the trial in the $2.6 billion bank fraud opens, MP Mohammad Dehghan has claimed that four legislators have been barred from standing for re-election on 2 March because of their support for the Amir Mansour Aria Group, at the centre of the alleged embezzelement.

Dehghan, who did not name the blacklisted MPs, also said there were heavy fines for Government and bank officials involved in the case.

1120 GMT: Bank Fraud Watch. Back from a weekend break to the news that the first trial in the $2.6 billion bank fraud has begun.

There are 32 defendants, represented by 28 lawyers, facing a 220-page indictment and 12,000 files. The prosecution is led by Tehran Prosecutor General Abbas Jafari Doulatabadi.

Although the trial is public, the faces of almost all the defendants have been pixellated, and almost no names are given.

One exception, however, is Amir Mansour Khosravi (also known as Mahafarid Amir Khosravi), who has been at the centre of the case since the fraud was revealed last September. Khosravi is the head of the Amir Mansour Aria Group, which supposedly used the billions in lines of credits to purchase 20 companies, including a major steel firm.

This morning, the deputy prosecutor gaves details of Khosravi's alleged manipulations.

0620 GMT: Writing the Supreme Leader. In his 23rd letter to Ayatollah Khamenei, dissident Mohammad Reza Nourizad has a pointed message: "They will attack us...and people don't care because Americans are perhaps better."

0600 GMT: Elections Watch. Various manoeuvres on Friday around the forthcoming Parliamentary elections....

MP Ali Motahari, leader of the breakaway principlist faction, has declared that the philosophy of the Parliament must be to stop the Government's violation of the law: "In our system, the Government holds the power and power can lead to corruption."

Motahari, looking beyond the election, also signalled determination to bring the President into Parliament for questioning: "Interrogation of the President is within the authority of the Parliament and the Supreme Leader cannot interfere in the Parliament's job."

Motahari's remarks challenged a speech at Qom University by Gholam Hussain Elham, a former spokesman for the Government and a member of the pro-Ahmadinejad Resistance Front”: "If Ahmadinejad's rivals form the next Parliament and/or if the Parliament interrogates Ahmadinejad, the country will fall into a crisis."

Another member of the Resistance Front, Mehdi Kouchakzadeh, took aim at former President Hashemi Rafsanjani, "I cannot accept that some people [such as Motahari] try to cover up Hashemi Rafsanjani;s deviation by exaggerating the deviations and problems of [Ahmadinejad's right-hand man Esfandiar Rahim] Mashai."

Meanwhile, Alireza Zakani, a leading member of the principlist Unity Front had a request for the Ahmadinejad supporters in the Resistance Front: he asked them not to "ruin the face and respect of Shahid Rajaei", the second President of the Islamic Republic, assassinated by the Mujahedin-e Khalq, by referring to Ahmadinejad as a "second Rajaei".

0550 GMT: We begin this morning with a snapshot of life in Iran's capital from "A Correspondent" for Tehran Bureau. His/her observations from will be posted in a separate feature later this morning, but for now we note this telling extract:

Business that was being conducted through postdated checks is no longer happening. Put cash on the table; otherwise, no deal. People I owe money to have started court proceedings, and their phone calls are getting uglier by the day. I was surprised to get a phone call from the accounting department of a hospital I owed money to, as I thought the last place there would be financial problems would be a hospital, but it is a private hospital and has hundreds of personnel. The caller was hysterical and screaming at me to pay up or else.

What has got people upset...is the feeling that their assets have lost half their value, as a result of the rial losing its value against the dollar. One dentist who I know sold an apartment at half its value in order to get the money out to his relatives, but then he found out that, instead of paying 200 rials for each dollar to make the transfer, he had to pay 1,000 rials, and on top of this he is running out of imported [dental] materials and is considering closing down. If the most minor military confrontation with the outside world takes place, it will make it impossible to sell property and that will be when the economy will be shaken hard, whereas at the moment those with money are snapping up bargains and even people with money outside of Iran are buying as they are getting huge discounts.