Israel says Iran economy 'on verge of collapse'

Iran's economy is edging towards collapse due to international sanctions over its controversial nuclear program, Israeli Finance Minister Yuval Steinitz said.

Israel regards the prospect of its arch enemy developing nuclear weapons as a threat to its existence, and Prime Minister Benjamin Netanyahu has said that, although sanctions are taking their toll, they are not yet forcing Iran to abandon work that could soon lead to a nuclear warhead.

However, Israeli officials appear increasingly ready to acknowledge the effect of recent American and European sanctions designed to restrict Iran's lifeline oil exports.

"The sanctions on Iran in the past year jumped a level," Steinitz told Israel Radio, noting that as finance minister, he follows Iran's economy.

"It is not collapsing, but it is on the verge of collapse. The loss of income from oil there is approaching $45-50 billion by the year's end," Steinitz said.

The United States, Israel's main ally, says it will not allow Tehran to produce the bomb, but sanctions should be given more time to work before force is considered.

American and Israeli commentators say a military strike to destroy Iran's nuclear plants, which Iran says are designed only to develop a nuclear generating capacity, could trigger a regional war with unforeseeable consequences.

In Israel too, some prominent political and military figures question Netanyahu's warning that Iran is so close to the threshold of nuclear capability that military action will soon be the only way to stop it.

But there has been no open split in his coalition over the issue. Steinitz praised the prime minister's speech to the U.N. General Assembly last week in which he used graphics to underscore the perceived Iranian threat.