"Reducing the consumption of imported goods means confronting the sanctions. There is no other way," Mahmoud Bahmani told a news conference.

"Sanctions are happening and we should not be scared or frightened. We should convert the sanctions into opportunities."

The UN Security Council hit Iran with a fourth set of sanctions on June 9 over its nuclear programme. The United States and European Union have since imposed even tougher punitive measures of their own.

Bahmani insisted the way to thwart the effect of the sanctions -- which target Iran's banking, financial and energy sectors -- was to cut down on imports.

"We need to decrease imports. We should not allow all goods to enter the country," the central bank governor said, adding Iran must produce most of the goods itself and also raise taxes on inbound luxury items.

Iran's imports for the year to March 2010 totalled about 55 billion dollars, the state news agency IRNA reported, citing economic ministry figures.

Bahmani also advocated reducing domestic consumption of gasoline, a petroleum targeted by the unilateral US sanctions.

Iran, OPEC's second largest exporter of oil, depends significantly on imported gasoline to meet its domestic requirements due to a lack of refining capacity.

President Mahmoud Ahmadinejad had called earlier on Sunday for similar action, saying Iran must lift its production levels to a "global scale" in order to "inflict a blow" on world powers.

The hardliner particularly dismissed the "pitiable" European nations, saying Iran's economy was not dependent on them, according to ISNA news agency.

"They don't know anything about Iran... Iran's economy is worth 900 billion dollars and our (trade) exchange with Europe is less than 24 billion dollars. Nothing will happen due to their sanctions," Ahmadinejad said.

The Iranian president added that even if the sanctions do impact on Iran, that would only be felt in the "next five to 10 years and not during Obama's term."

earlier related report
US remains 'open to engagement' with Iran: Clinton
Washington (AFP) Aug 8, 2010 - US Secretary of State Hillary Clinton said the United States remains "open to engagement" with Iran amid tensions over its nuclear aims, according to an interview transcript released Sunday.

"We remain open to engagement. But they do know what they have to do. They have to reassure the international community by words and actions as to what their nuclear program is intended for," she said in an interview with The New York Times.

"And so whether it would take six months, a year, or five years, it's that deep concern about Iran acquiring nuclear weapons that is the preoccupation of our friends and partners," she said.

But Washington, she added, would pursue the sanctions path "regardless of any issue of timing, because we think it's got the best potential for changing Iranian behavior."

Clinton's comments were released by the State Department Sunday, a day after brief quotes from her 20-minute Times interview appeared in the newspaper.

Earlier this week, President Barack Obama cautiously welcomed the effects of new sanctions on Iran but said he remained willing to talk with Tehran about its nuclear program, in a meeting with a small group of journalists at the White House.

"It is very important to put before the Iranians a clear set of steps that we would consider sufficient to show that they are not pursuing nuclear weapons," Obama said, according to The Washington Post.

"They should know what they can say 'yes' to."

Reports said Obama left open the possibility that the United States would accept a deal allowing Iran to maintain its civilian nuclear program, so long as Tehran provides "confidence-building measures" to verify that it is not building a bomb.

Clinton did not specifically address such a deal, but said Tehran had been provided a "pathway" in order to "demonstrate that they are not attempting to obtain nuclear weapons."

The top US diplomat also said the sanctions packages "surprised Iran by the scope and reach of what the international community was prepared to do on the pressure front," and that the economic effects of the sanctions were "beginning to bite."

"We are hearing from many different sources around the world that this is having an impact on Iran's thinking, and they've undertaken dramatic diplomatic and commercial maneuvers to try to prevent the sanctions from being levied on them... and are falling short."

The US-Iran nuclear showdown has proven to be one of the most intractable problems facing Obama in his 18 months in office, and top aides including Defense Secretary Robert Gates have consistently refused to rule out a possible US military strike on Iran.

But Clinton sought to downplay suggestions that the Obama administration may be drawing a line under the latest efforts to get Tehran to curtail its nuclear ambitions.

"The president's been very clear that Iran should understand that he is leaving all options on the table and that they should take him at his word, but I don't think it benefits our efforts to go much further than that."

Earlier in the week, White House spokesman Robert Gibbs rebuffed a proposal from Iran's hardline President Mahmoud Ahmadinejad for face-to-face summit talks with Obama.

Ahmadinejad meanwhile urged Obama on Wednesday to join talks on a nuclear fuel swap deal, saying Tehran was ready to begin discussions.

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