Iran Facing Tougher Sanctions
By: John Hampton
Beginning July 1st, the United States imposed more stringent economic sanctions on Iran, which are aimed at their petroleum exports. The sanctions were enacted through the National Defense Authorization Act (NDAA), which was passed into law in December 2011. A six month study was done by the Obama administration to determine the impact of the sanctions on global markets, prior to implementation.
The intent behind the sanctions was to prohibit any foreign financial institutions settling oil trades with Iran’s central bank, from gaining access to the U.S. banking system. This, in theory, would greatly reduce Iran’s ability to export its oil and have a deleterious impact on its economy.
On June 30th, Secretary of State Clinton said in an interview with Bloomberg Radio in Geneva: “The pressure track is our primary focus now, and we believe that the economic sanctions are bringing Iran to the table. They are going to continue to increase and cause economic difficulties for them.”
Secretary Clinton has exempted at least twenty countries from the sanctions. Some of the exempted countries are China, Japan, Singapore, India, South Korea and South Africa. In order to receive the exemption, countries must have demonstrated greatly reduced imports of Iranian oil. China received its exemption on the final day before the sanctions were implemented.
I don’t consider China a friend of the U.S., but I’m not surprised they were exempted, considering how much of our debt they own. Excessive debt has greatly diminished our ability to influence the outcome of world events. But I’m wondering: once a country gains an exemption, will there be measures in place to ensure that that country maintains the reduced import levels that qualified if for the exemption? Or will we soon be reading headlines describing how exempted countries have returned to their pre exemption import levels? And if that is the case, will the administration abrogate the exemption or just look the other way for the sake of convenience? And did the administration’s study include evidence that exempted countries actually reduced imports of Iranian oil or did they just take their word for it?
I don’t mean to beat a dead oil drum, but it certainly seems counterproductive, especially when dealing with Iran, to implement tougher sanctions and then exempt numerous countries from the requirement to adhere to them.
Of course something needs to be done to prevent Iran from developing a nuclear weapon. I’m guessing that military intervention would, and should be the last option. But how much longer will Israel sit in suspense as the threat to their country grows? Secretary Clinton said she believed that the economic sanctions were bringing Iran to the table. We all know how adept the Iranians are at engaging in negotiations that do nothing other than buy them more time. They have had ample experience with present and past administrations. So if the only goal of the current sanctions is to once again bring Iran to the table, then I posit they have already failed. Should not the goal of the sanctions be to cause a cessation of Iranian nuclear weapons development? If that’s what Secretary Clinton wants, why didn’t she say it?
Will the sanctions produce the desired result? The Obama administration cites oil industry stats confirming that over the past year, Iranian oil exports have dropped from 2.5 million barrels per day to 1.5 million barrels per day. The estimate of lost revenue is said to be about $32 billion. Iran’s commercial airline industry has also been negatively impacted. The sanctions have created a shortage of jet fuel and spare aircraft parts. In addition, major cargo lines are boycotting Iranian ports. And U.S. officials estimate the inflation rate at more than 20%.
On the other hand, it has been reported that the National Iranian Tanker Company has changed the names and flags of its fleet in an attempt to circumvent the sanctions. As of July 1st, the European Union stopped its importation of Iranian oil and its policy of insuring ships carrying their product. But the Iranian parliament has passed legislation allowing private sector companies to sell about 20% of the country’s oil. Money used to purchase oil under this ruse would not be paid into the Iranian central bank, and theoretically, would not overtly violate the sanctions.
Former adviser on the Middle East to George W. Bush, Elliot Abrams, remarked that Iranian leaders appear willing to accept economic deprivation rather than budge on their right to enrich uranium.
And then there’s Iranian central bank governor Mahmoud Bahmani who said that despite the sanctions, it is still easy to sell oil because of the waivers granted to many countries by the United States.
Perhaps to show the Iranian people that their government will not be intimidated by the U.S., Iran is once again threatening to block the Strait of Hormuz. Be prepared for the resulting spike in gas prices – a consequence Iran knows all too well. The United States has been beefing up troop levels and moving additional equipment to the region in recent months.
And just this week, Iran has been carrying out war gaming exercises in response to what they describe as; a refusal by the United States and Israel to rule out military strikes against their nuclear development plans (Iran claims their nuclear development is for peaceful purposes). The exercises included the firing of multiple ballistic missiles (I’m guessing not for peaceful purposes). According to State Department spokeswoman Victoria Nuland, the drills are in violation of a U.N. Security Council resolution that “prohibits Iran from undertaking any activity related to ballistic missiles capable of delivering nuclear weapons.” Many U.S. assets, along with Israel, are well within range of these Iranian missiles.
Iranian General Hossein Salami said of the missile launches: “It is a response to the political impoliteness of those who talk about all options being on the table.” I’m sure U.S. officials are quite disturbed at the thought of General Salami feeling that our policies are somewhat rude.
But this is no joke! Obviously Iran would ultimately be overwhelmed in any military matchup with the United States. However they do possess tanks, jets, missiles and hundreds of thousands of troops. They could potentially cause some degree of casualties or damage to U.S. assets in the region before being destroyed.
On July 4th, Iranian officials threatened to destroy U.S. bases in the region if their country was attacked. More than anything else, this is all sabre rattling by Iran. But the point is this: they are a presence, they have capabilities and they do not like America. This makes them a threat which must not be ignored.
Will the sanctions work? Maybe yes – maybe no. Bottom line: the Iranian regime is working toward development of a nuclear weapon. If our government didn’t believe that, they would not be imposing the sanctions. The question is, and has been for quite some time, how to stop them. We do know that recent Iranian missile tests violated a U.N. Security Council resolution. Will Iran be held accountable for this violation? We also know that negotiations with Iran don’t seem to accomplish much. And although a viable and effective tool, military action would almost certainly lead to a myriad of unintended and parlous consequences.
Lines have been drawn in the sand as the United States and Iran attempt to stare each other down. Who will blink first? Will Iran attempt to block the Strait of Hormuz? Will the U.S. launch a pre-emptive strike against Iran? Will a compromise be reached and if so, what form will it take? At this point, there are no absolute answers to these questions. All we can do is wait and pray for the safety of our troops and the safety of our Nation.
John Hampton lives in Tehachapi CA and is quite concerned about the policies and motives of the current Administration. He believes in a system that holds our freedoms sacred, promotes personal responsibility, prudence and high moral standards.