Economic pain can't be the sole pressure point |
Gulf Today - 10 July, 2012
Author: Meghan L. O'Sullivan
The latest Iran sanctions came into full effect this week, adding to a byzantine array of unilateral and multilateral measures that prohibit Iranian oil imports, other trade and financial transactions, and freeze Iranian assets by countries concerned that Tehran's nuclear programme is intended for military purposes, not civilian ones.
The international community is now on watch for cracks in Iran’s defiant stance: Will increased sanctions compel Tehran to make real concessions and allow for a diplomatic solution to the standoff? This characterisation is too simplistic, however, and the record suggests there may be some reasons to be optimistic that current sanctions on Iran will deliver.
Sanctions generally get a bad rap, with many declaring that they don’t work. First, sanctions against Iran are today just one tool in a larger strategy. In other cases — in South Africa, Serbia and Libya, for example — where sanctions have worked, they were not stand-alone instruments. In past decades, sanctions against Iran have constituted the entirety of the US-led strategy against Tehran’s nuclear ambitions. Today, in contrast, the US approach involves not only sanctions but also diplomatic talks, and at least some threat of military force.
Perhaps more important, sanctions against Iran have already had a real economic impact. Some reports assess that Iranian oil imports have dropped by as much as 1 million barrels a day since the end of 2011. This puts pressure on Iran’s budget, nearly 70 per cent of which is funded by oil revenue. Moreover, the value of the Iranian rail has dropped dramatically since September 2011 on account of Iran’s growing isolation from the international banking system and the need to resort to barter arrangements. As a result, inflation is on the rise.
But the real test of sanctions is not whether they are part of a nicely crafted strategy, or whether they create economic hardship, but whether they induce a change in the behaviour of Tehran’s leaders. Anticipating whether the pain from sanctions is sufficient to force this shift is always difficult, and even more so in a country like Iran where decision-making is opaque. After all, leaders from every country will insist they are impervious to the pressure — right up until the moment they make the sought-after concession.
The latest round of talks in Moscow between Tehran and the five permanent members of the UN Security Council, plus Germany, provide us with some clues, and the news isn’t good. Given the economic pain Tehran was already feeling, and the then-looming threat of increased sanctions, one might have expected Iran to respond positively. Unlike the UN or the International Atomic Energy Agency’s board of governors, those negotiating in Moscow did not demand a complete cessation of enrichment but allowed for a continued low level of this activity.
But the Iranians didn’t seize the opportunity. Instead, they demanded recognition of their right to enrich. This tough stance hardly indicates they perceived themselves to be under the sword of Damocles. Instead, it suggests that Tehran had decided to weather any and all economic pressure, seeing it as an unwelcome but possibly necessary cost of pursuing its nuclear ambitions.