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Full Article Images of January Best photos of the year 2011 Follow Reuters Facebook Twitter RSS YouTube Read Job growth surges, jobless rate near 3-year low 11:02am EST Snap analysis: U.S. job creation accelerates broadly 9:19am EST Iran threatens retaliation over oil embargo 10:37am EST Analysis: A sobering look at Facebook | 10:58am EST Wall Street gains 1 percent on jobs jump 10:31am EST Discussed 91 Romney wins Florida Republican presidential primary 88 Indiana poised to approve anti-union law 88 Job growth seen slowing after holiday boost Watched Iran sends toy drone to Obama Sun, Jan 29 2012 We are already in new great depression: Paul Krugman 5:15am EST Leftist protesters attack British banks in Buenos Aires Thu, Feb 2 2012 Iran threatens retaliation over oil embargo Tweet Share this Email Print Related News Iraq eyes waiver on U.S. Iran sanctions 7:32am EST Iran policy not swayed by phone firm, South Africa says 7:56am EST Nuclear experts barred from Iran site: diplomats 9:53am EST Analysis & Opinion The impact of defense cuts Images of January Related Topics World » Israel » Iranian women walk in front of the pictures of Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic (R) and Iran's Supreme Leader Ayatollah Ali Khamenei during the anniversary ceremony of Iran's Islamic Revolution at the Behesht Zahra cemetery, south of Tehran, February 1, 2012. Credit: Reuters/Raheb Homavandi By Parisa Hafezi TEHRAN | Fri Feb 3, 2012 10:37am EST TEHRAN (Reuters) - Iran's supreme leader threatened on Friday to retaliate against the West for sanctions, a day after a U.S. newspaper said defense secretary Leon Panetta believed Israel was likely to bomb Iran within months to stop it building a nuclear bomb. Ayatollah Ali Khamenei's defiant televised speech marking the anniversary of the 1979 Iranian revolution was the first time the top authority has spoken publicly about the impact of the new sanctions, which have strangled the Iranian economy since the start of the year. The long-simmering confrontation between the West and Iran over its nuclear program entered a decisive phase last month. Iran began enriching uranium at a deep underground bunker and the United States and Europe imposed new sanctions to prevent Tehran selling oil, putting its economy in a downward spiral. Iran holds a parliamentary election in a month - its first since a 2009 presidential vote triggered a failed popular uprising - and its tightly-controlled political system will have to cope with the economic hardship caused by sanctions. "In response to threats of oil embargo and war, we have our own threats to impose at the right time," Khamenei told worshippers in his televised speech. "Sanctions will not have any impact on our determination to continue our nuclear course," he said. "Such sanctions will benefit us. They will make us more self-reliant ... We would not achieve military progress if sanctions were not imposed on Iran's military sector." Behind the sanctions looms an underlying threat of war. Panetta said he would not comment on - but did not dispute - a report by Washington Post columnist David Ignatius that Panetta thinks Israel is likely to attack Iran in the next few months. Ignatius travelled with Panetta to Brussels this week. His column on Thursday was the strongest suggestion yet that Washington policymakers were bracing for an Israeli attack. "Panetta believes there is a strong likelihood that Israel will strike Iran in April, May or June - before Iran enters what Israelis described as a 'zone of immunity' to commence building a nuclear bomb," columnist David Ignatius wrote. "Very soon, the Israelis fear, the Iranians will have stored enough enriched uranium in deep underground facilities to make a weapon - and only the United States could then stop them militarily," Ignatius wrote. Panetta told reporters: "David Ignatius can write what he will but - with regards to what I think and what I view - I consider that an area that belongs to me and nobody else." Asked if he disputed the story, he said: "No ... I'm just not commenting." Three U.S. national security officials told Reuters on Friday Washington had no specific intelligence that an Israeli attack on Iran was imminent, but they were concerned because of recent public statements by Israeli officials. The U.S. officials also said they believed Israel would not warn Washington in advance if it planned to strike. Washington, which like Israel has not ruled out an attack on Iran to stop it from developing an atomic bomb, has made clear it believes sanctions should be given a chance to work before a military strike is considered. U.S. officials have repeatedly tried to persuade Israel to hold fire. SANCTIONS PAIN Obama signed new sanctions into law on New Year's Eve that would block any institution dealing with Iran's central bank from the U.S. financial system. The European Union announced similar measures last week. The sanctions, if fully implemented, would make it impossible for countries to buy Iranian oil. To prevent havoc on energy markets, Washington is offering waivers to countries if they cut their trade with Iran gradually. There are signs that other imports are also being affected, with ships bringing grain sailing away from Iranian ports because they have not received payment for their cargo. A leading agricultural consultancy said on Friday Ukraine had cut its exports of corn to Iran by 40 percent last month because EU sanctions were preventing firms from getting paid. The sanctions are causing real hardship for Iranians with just four weeks to go before the parliamentary election. The last time Iranians voted three years ago, a disputed result led to eight months of violent street protests, by far the worst unrest the country has seen since the 1979 revolution that installed rule by Shi'ite clerics. The authorities put down that revolt with force, but in the past year the "Arab Spring" has shown the vulnerability of governments in the region to public outrage fuelled by anger over economic hardship. "Prices are going up every day, life is expensive. I buy chicken or meat once per month. I used to buy it twice per week," said vegetable seller Hasan Sharafi, 43, father of four, in the central city of Isfahan. "Sometimes I want to kill myself. I feel desperate. I do not earn enough to feed my children." It remains to be seen how tightly Iran will be squeezed by the new sanctions. The EU, which collectively bought about a fifth of Iran's oil last year, is halting all purchases. Iran is scrambling to find new buyers and persuade its existing customers to keep doing business with it. Major Iranian oil customers are seeking waivers from Washington from the sanctions, while also looking for alternative suppliers. Saudi Arabia, Iran's regional rival, has promised to make up any shortfall in supply. China, which bought about a fifth of Iran's crude last year, has denounced the sanctions, but has also cut its purchases of Iranian oil by half in January and February this year and is seeking deep discounts for the oil it continues to buy. An article in the People's Daily on Friday said tension between Tehran "is disturbing global energy markets and has case a shadow over the global economic recovery." (Additional reporting by David Alexander in Brussels, Mark Hosenball in London and Pavel Polityuk in Kiev; Writing by Peter Graff; editing by Elizabeth Piper) World Israel Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. 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For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (23) BradArnold wrote: Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Advertise With Us Connect with Reuters Twitter Facebook LinkedIn RSS Podcast Newsletters Mobile About Privacy Policy Terms of Use Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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