US: “Nuclear Iran Unacceptable;” Iran: “Sanctions Hurt.”

— by David Streeter

Defense Secretary Leon Panetta told CBS News that a nuclear-armed Iran is “unacceptable” and that the United States “will take whatever steps necessary to stop it.” The exchange between Panetta and CBS’ Scott Pelley went as follows:

Pelley: If the Israelis decide to launch a military strike to prevent that weapon from being built, what sort of complications does that raise for you?
Panetta: Well, we share the same common concern. The United States does not want Iran to develop a nuclear weapon. That’s a red line for us and that’s a red line, obviously, for the Israelis. If we have to do it we will deal with it.
Pelley: You just said if we have to do it we will come and do it. What is it?
Panetta: If they proceed and we get intelligence that they are proceeding with developing a nuclear weapon then we will take whatever steps necessary to stop it.
Pelley: Including military steps?
Panetta: There are no options off the table
Pelley: A nuclear weapon in Iran is…
Panetta: Unacceptable.

Panetta’s statements coincide with recent admissions from Iranian government officials that the country is sustaining damage from the recently-increased sanctions.

Coverage from the New York Times follows the jump.

Iran’s veneer of stoicism toward the Western sanctions that have disrupted its economy showed some new strains on Monday, as the deputy oil minister acknowledged a decline in domestic petroleum production because of dwindling foreign investment, and four-year-old talks between the Iranians and Poland’s biggest natural gas developer collapsed.

The Iranians also suffered an embarrassment after prematurely announcing that a Russian oil company had committed $1 billion to help revive a dormant oil field in Iran’s southwest. Hours later, the Russian company, Tatneft, denied on its Web site that a deal had been signed. And there were signals that Saudi Arabia, which Iran had confidently predicted last week would not increase oil production to compensate for any Iranian shortfall caused by the sanctions, was becoming increasingly irritated with Iran.

Together, the developments portrayed Iran, with the world’s fourth-largest oil reserves and second-largest natural gas reserves, as struggling more than it had admitted from the effects of the Western sanctions, despite its official denunciations of them as desperate measures doomed to fail or backfire.

The sanctions, imposed to pressure Iran into ending its suspect nuclear program, were strengthened last month, with the possibility of more onerous restrictions on Iran’s central bank and oil industry looming from the United   States and the European Union. Under a measure that is likely to be signed into law by President Obama, foreign entities that do business with Iran’s central bank, the conduit for Iran’s oil revenue, could face severe penalties if they do business in the United States.

Iran’s deputy oil minister, Ahmad Qalebani, appeared to have made an unusual disclosure about the effects of sanctions in an article reported by the official Iranian Students’ News Agency, which quoted him as saying Iran’s crude oil production in 2011 had declined from the year before. He said the decline was ‘due to lack of investment in oil field development.’

Iran produced about 4 million barrels a day of oil in 2010 and is producing about 3.5 million barrels this year.

Mr. Qalebani’s disclosure followed recent warnings by other Iranian officials that the effects of sanctions had become more acute. The foreign minister, Ali Akbar Salehi, was quoted by the official Islamic Republic News Agency as saying, ‘We cannot pretend the sanctions are not having an effect.’ The governor of Iran’s central bank, Mahmoud Bahmani, told reporters in Iran last week that the country must act as if it were ‘under siege,’ Agence France-Presse reported.