CRS questions effectiveness of Iran sanctions

Separate report claims sequestration will cut US aid to Israel by $155m.

By MICHAEL WILNER, JERUSALEM POST CORRESPONDENT
Hagel and Yaalon discuss nuclear threat 370 (photo credit: REUTERS)
Hagel and Yaalon discuss nuclear threat 370
(photo credit: REUTERS)
WASHINGTON - ­ The Congressional Research Service, a nonpartisan research arm of the US Congress, has released a report questioning the efficacy of US efforts to dissuade Iran from developing its nuclear program through sanctions.
While noting that the sanctions have been objectively harsh on the Iranian regime, CRS says that the regimen has roundly failed not only in dissuading Iran from curbing its nuclear program but also in hindering the Islamic Republic¹s ability to develop weaponry indigenously, illegally ship arms overseas to the Assad government, or alter its policy of repression against those who dissent from government authority.
The economic ramifications have been real and punishing: oil sales from Iran have halved, the country has experienced a dramatic decline in GDP and collapse in currency, and the government's operating budget is in flux such that it can't seem to pay many of its bills. But protests against these changes have not come to pass, emboldening the government to continue on its nuclear path, CRS claims.
"The strategic effects of sanctions might be abating as Iran adjusts to them economically and advertises the adverse humanitarian effects," the report charges. "Sanctions do not appear to have reduced Iran's influence or strategic capabilities in the Middle East." Government affiliates are bartering through front companies as a response, and wealthier citizens have turned to real estate as the rial has effectively collapsed.
"Traders are using informal banking exchange mechanisms and, benefiting from the fall in the value of Iran's currency, sharply increasing non-oil exports such as agricultural goods, minerals, and industrial goods," CRS reports.
"Some argue that Iran might even benefit from sanctions over the long term by being compelled to diversify its economy and reduce dependence on oil revenues," the report adds.
In a separate report examining US aid to Israel, CRS estimates that sequestration will cut aid to Israel by roughly $155 million.
"Defense Department appropriations for Iron Dome and joint US-Israeli missile defense cooperation are considered non-exempt defense discretionary funding, and are therefore subject to a 7.8% reduction," the report explains.
CRS emphasized that the $155m. calculation is an early estimate; the figure could increase if the departments of state or defense decide to reprogram their aid packages to Israel in order to compensate for lost funding as a result of sequestration.
Looking at the long-term history of the aid, CRS affirmed its importance in a relationship with remarkable consistency but warns that sequestration might be a sign of what the future holds.
"Economic conditions in the United States and Israel may affect future US aid to Israel," the report reads. "With the prospect of prolonged fiscal austerity in the United States, overall American public support for foreign aid may diminish in the years ahead."