Iran responds with missile tests

Iran's Revolutionary Guards plan to conduct war games starting on Monday, which will include drills with surface-to-surface missiles aimed at models of foreign bases, the official IRNA news agency reported Sunday.

"Iran will respond to any possible evil" in a "strong and crushing" way, General Ami Ali Hajizadeh said, according to the report.

Meanwhile, Iranian officals said the Islamic Republic has stockpiled currency reserves and imported goods in order to ease the impact of an oil embargo by the European Union.

The EU's embargo went into full effect on Sunday, with any outstanding contracts for oil imports to the 27-member bloc now terminated. European companies are also forbidden from insuring Iranian oil.

Iran's central banker, Mahmoud Bahmani, told the semi-official Mehr news agency that Tehran had stored up some $150 billion (118 billion euros) in hard currency reserves.

"We are implementing programs to counter sanctions and we will confront these malicious policies," Bahmani said.

Hard times for Iran

The Islamic Republic receives much of its hard currency through its oil exports. Hard currency refers to internationally traded currencies that are considered a reliable store of value, such as the dollar and the euro.

Tehran uses its hard currency reserves to buy imports. Iranian oil exports, however, have dropped precipitously since the United States implemented tough financial sanctions earlier this year.

Washington claims that its sanctions have cut Iran's oil exports from 2.5 million barrels a day last year to between 1.2 to 1.8 billion barrels now. The EU's embargo will likely put Iran in an even tougher bind, since 20 percent of the Middle Eastern nation's oil exports go to the 27-member bloc.

"The United States welcomes the European Union's prohibition of all Iranian crude oil imports and other sanctions on Iran's oil industry, which go into full effect today," White House spokesman Jay Carney said in a release.

"This collective decision of the 27 countries of the European Union represents a substantial additional commitment on the part of our European allies and partners to seek a peaceful resolution that addresses the international community's concerns about Iran's nuclear program," Carney said.

New customers

Iran's oil minister, Rostam Ghasemi, told state television that the Islamic Republic had already stopped selling oil to many EU countries and had sought new customers elsewhere.

"Developing countries and countries with fast economic growth have no alternative to oil," Ghasemi said. "Fortunately, because of the quality of our country's oil, all are interested in using it."

The EU has implemented its oil embargo in a bid to force Iran to stop uranium enrichment and open its nuclear program to international inspectors. Brussels and Washington accuse Iran of trying to build a nuclear bomb, while the Islamic Republic says its atomic program is for peaceful energy and medical purposes.

slk,tm/ccp (AP, Reuters)