BERLIN – International sanctions on Iran have taken on new life after a group of
US senators sent a letter on Tuesday to Catherine Ashton, the EU’s chief
diplomat, urging the 27-member alliance to implement an oil embargo against the
The fast-moving nuclear events in Iran, including
Tehran’s decision to produce weapons-grade uranium at its Fordow facility deep
underground, appear to have prompted the EU foreign ministers to meet on January
23 instead of January 30 as had been scheduled.
The EU tentatively agreed
last week to pull the plug on its imports of Iranian crude oil.
US Senators Joe Lieberman (I-Connecticut), Mark Kirk (R-Illinois) and Charles
Schumer (D-New York) wrote Ashton, “We believe that both [cutting ties with
Iran’s Central Bank and embargoing its oil] are absolutely necessary if we are
to prevent the Iranian regime from acquiring nuclear weapons and thereby
foreclose either a regional war or a cascade of nuclear proliferation in the
Senators Robert Menendez (D-New Jersey), Jon Kyl
(R-Arizona), Bob Casey (D-Pennsylvania), Marco Rubio (R-Florida) and Kirsten
Gillibrand (D-New York) also signed the letter.
Purchasers of Iranian
fuel pay through the Central Bank.
The pressing question is: Can oil
sanctions contribute to a radical change in Iran’s recalcitrant behavior? In a
show of defiance on Wednesday, Iran’s Atomic Energy Organization said in a
statement, “We will continue our [nuclear] path without any doubt... Our path is
The EU move to sever ties with Iran’s oil industry would
have been largely unimaginable a year ago. A deeply anchored EU strategy of
engagement with the Islamic Republic coupled with annual bilateral trade volume
of more than 25 billion euros impeded tough action from Brussels.
countries import roughly 500,000 barrels per day of Iran’s 2.6 million bpd
export production. Only Saudi Arabia produces more oil than Iran, with a daily
turnout of 3.5 million bpd.
With a view toward not rattling oil markets
or jolting fragile EU economies such as those of Greece, Spain and Italy, which
depend on vast amounts of Iranian crude, the EU laid out on Thursday a staggered
sanctions plan to be put in place over the next six months.
experts are optimistic. But there remains a need to raise the financial and
diplomatic sanctions bar.
Daniel Schwammenthal, the director of the AJC
Transatlantic Institute in Brussels, told The Jerusalem Post on Wednesday, “We
welcome that the EU has in principle decided to impose an oil embargo on
But we hope that when foreign ministers meet later this month, they
will impose that ban immediately and apply it to existing
Schwammenthal wants the EU to further ratchet up the
“In addition, we urge European leaders to sanction Iran’s
Central Bank, as Great Britain and the US did. It is this combination of energy
and financial measures that can create the sort of ‘crippling sanctions,’ to use
the words of US Secretary of State Hillary Clinton, that may still have a chance
to stop Iran’s nuclear weapons program peacefully,” he said. “After years of
Iranian deceptions and lies, nothing short of Tehran’s total isolation, which
should include travel bans for all regime officials, can convince the Islamic
Republic of Iran that it’s simply too costly to continue ignoring their
While some EU countries and US Treasury
officials were initially concerned about oil sanctions raising prices and thus
Iran’s revenues, and hurting world economies, a set of surgical punitive
measures targeting Iran’s main source of income, its oil and gas sector, has
The strategy of imposing laser-like oil sanctions
without disrupting global energy markets, and thereby reducing Iran’s oil
revenues, was first developed by Mark Dubowitz, executive director of the
Foundation for Defense of Democracies, and Reuel Marc Gerecht, a former CIA
officer and a senior fellow at the foundation.
In a series of articles in
The Wall Street Journal and The New York Times last year, Dubowitz and Gerecht
outlined their approach.
Writing in the Times in November, they argued
that “effective energy sanctions don’t have to raise oil prices; they can
actually do the opposite. Washington just has to learn how to leverage
They continued, “With fewer buyers to compete with, the Chinese
companies would have significant negotiating leverage with which to extract
discounts from Tehran. The government could lose out on tens of billions of
dollars in oil revenue, loosening its hold on power. This approach may seem
distasteful to some, because it does, in a sense, reward bad Chinese behavior.
But the objective of sanctions is to cause real economic pain in Tehran, not to
make Americans feel moral.”
A telling result of the Dubowitz and Gerecht
smart sanctions approach was cited in the International Herald Tribune last
According to the paper, “China, which imports about 11 percent of
its oil from Iran, has actually reduced its daily purchases of Iranian crude,
although estimates of the cutback range from as little as 15,000 barrels a day,
or 3% of Chinese imports from Iran, to considerably more than that. It was hard
to know whether Beijing was making a political statement or merely trying to buy
the oil on better terms.”
Dubowitz told the Post on Wednesday that “the
EU oil embargo, even if it contains waivers and a slower than desirable
implementation schedule, will be a critical first step. It is already setting
off a cascade of oil market behavior as Japan and South Korea decrease their
purchase of Iranian oil in order to be in compliance with US Central Bank
sanctions, and China forces the Iranians to offer price discounts to compensate
their refineries for the added political and legal risk of continuing their
purchases of Iranian oil.”
He continued that “Saudia Arabia, Kuwait, the
UAE and other oil producers are increasing their supplies to give Japan, South
Korea, India and China the cushion to reduce their purchases and drive
ruthlessly for price discounts. The goal of US sanctions and the EU embargo is
to target Iranian oil revenue which is Khamenei’s lifeblood. Countries should be
considered as cooperating under US law if they help to decrease Iranian oil
revenue through cuts in purchases of the oil, reductions in the price that they
pay for every barrel, or both. This helps to calm oil markets as traders realize
that sanctions are designed not to take 2.3 million-2.5 million barrels of
Iranian oil immediately off the market, but to replace some of that oil with
supplies from other sources, and to put downward price pressure on the remaining
The next step in ratcheting up the oil sanctions
pressure on Iran will concern the vital East Asian and Indian
The Saudis have agreed to supply 4 million barrels more to India
in January – about a 23-24% increase, which is designed to replace Iranian oil.
Indian Foreign Minister S.M. Krishna, however, gave no indication that his
country would reduce its import of Iranian crude oil during his visit to Israel
Benjamin Weinthal is a research fellow with the Foundation for
Defense of Democracies.
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