Are sanctions kicking in?

As major oil companies pull out of Iran, analysts differ over the import of new economic restrictions.

June 29, 2010 22:58
3 minute read.
Iranian President Mahmoud Ahmadinejad speaks at a

Ahmadinejad at NPT 311. (photo credit: AP)


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By all objective standards, Iran this week is facing some version of a moment of truth.

Responding to the impending imposition of beefed-up UN economic sanctions, French oil company Total announced publicly that it was suspending oil shipments to Iran, and the Spanish oil giant Repsol withdrew from a contract to develop part of a large Iranian oil field. Even Iran’s neighbor, the United Arab Emirates, announced a series of moves to comply with the strengthened sanctions regime.

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But analysts disagree over the import of the sanctions, and the degree to which the new approach will influence the Iranian government.

“These new sanctions will target Iran’s financial sector, Iran’s ability to trade, Iran’s ability to communicate with the external world and travel, which begins to target the energy sector, and squeeze a number of companies connected to the Revolutionary Guard,” Dr. Emanuele Ottolenghi, a senior fellow at the Foundation for the Defense of Democracies and author of Under a Mushroom Cloud – Europe, Iran and the Bomb, told The Media Line.

“All of these things combined will have a significant effect,” Ottolenghi went on.

“Obviously, it could have been much tougher, but there are some aspects of the resolution which, if implemented honestly, conscientiously and resolutely can do a great deal of damage at a time when the Iranian economy is particularly fragile due to the vast incompetence of the current government.

“And the internal political situation makes the government more vulnerable,” he continued.

“If you look at sanctions as a way to slow down and damage the efforts of the regime, then these efforts are valuable.”

He added, “Those who think that sanctions will solve the problem are wrong: Sanctions are not going to convince [Iranian] President [Mahmoud] Ahmadinejad or the Supreme Leader [Ali] Khamenei to reconsider their approach to nuclear power, nor are sanctions going to bring down the regime.”

However, Ottolenghi said, “if properly implemented, sanctions can achieve two goals: first, to reduce the ability of Iran to procure and acquire sensitive technology abroad, which will significantly slow down the Iranian race to nuclear weapons. The second value of the sanctions is that they will immensely raise costs for Iran to engage in all of its illicit activities, wreaking havoc into the system by, for example, by sowing discontent among those within the regime who are in it just for the profit.”

But Dr. Seyed Muhammad Marandi, a professor at the University of Teheran, argued that the sanctions would fail in their stated goals.

“I don’t think that sanctions will have a major effect on Iran, especially since the Iranians had been preparing for the sanctions for quite a while now,” he told The Media Line. “Iran is trading less and less with Europe and North America, and has been finding alternative partners in Asia, Latin America and Africa.

“Beyond diversifying its trade, Iran has also become more independent – for example, in its consumption of oil, with heavy investment in oil refineries. So Iran is much more independent than it was a few years ago,” Marandi said.

“There will be a minor effect,” he continued.

“For example hospitals will have difficulty importing equipment from Europe. But at the end of the day, it’s not going to have a major effect on the Iranian economy, and the irony is that the more sanctions that the West places on Iran, the greater the gap between them and the less leverage Western countries have over Iran.”

Dr. Mehrdad Khonsari, a former Iranian diplomat and senior research consultant at the Center for Arab and Iranian Studies, argued that the sanctions would delay, but not solve, the principal conflict between Iran and the West.

“The sanctions will obviously have some kind of an effect on the Iranian economy by making conditions worse for all Iranians,” he told The Media Line.

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