Jump to content

International sanctions against Iran: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
→Humanitarian impact: Black market development, and the shortages of vital medicines.
→Political Effects: wikify (See WP:NOT for news content)
Line 71: Line 71:


===Political Effects===
===Political Effects===
{{see also|Economy of Iran}}
⚫
The internal [[politics of Iran]] are harder to gage in reference to the sanctions which have been laid against Iran since early 2011. There has been a divide between [[President Ahmadinejad]] and Supreme Leader [[Khamenei]] since early 2011; differences between the two stems more from internal political ambitions than the current effects of international sanctions. Though among most Iranian politicians, the effects of the sanctions are attributed directly to Ahmadinejad’s mismanagement of internal and external economic factors.{{fact}} Furthermore, 94 [[Iranian Parliament]]arians signed a formal request to have Ahmadinejad appear before the “Majles” (parliament) to answer questions about the currency crisis. The Supreme Leader, terminated the parliaments request in order to unify the government in the face of international pressure. <ref>http://www.fas.org/sgp/crs/mideast/RS20871.pdf, Kenneth Katzman </ref> Nonetheless, Ahmadinejad has been called to questioning by parliament on a number of occasions, to justify his position on issues concerning domestic politics. His ideologies seem to have alienated a large portion of the parliament, and stand in contrast to the standpoint of the Supreme Leader.{{dubious}}<ref>http://www.time.com/time/world/article/0,8599,2109154,00.html</ref>.<ref>http://www.nytimes.com/2012/03/15/world/middleeast/iran-ahmadinejad-questioned-before-parliament-majlis.html?pagewanted=all</ref>.


⚫
A recent report by Dr. [[Kenneth Katzman]], for the ''[[Congressional Research Service]]'', listed the following factors as major examples of economic mismanagement on the part of the Iranian government:
⚫
The internal politics of Iran are harder to gage in reference to the sanctions which have been laid against Iran since early 2011. There has been a divide between President Ahmadinejad and Supreme Leader Khamene’i since early 2011; differences between the two stems more from internal political ambitions than the current effects of international sanctions. Though among most Iranian politicians, the effects of the sanctions are attributed directly to Ahmadinejad’s mismanagement of internal and external economic factors. Furthermore, 94 Iranian Parliamentarians signed a formal request to have Ahmadinejad appear before the “Majles” (parliament) to answer questions about the currency crisis. The Supreme Leader, terminated the parliaments request in order to unify the government in the face of international pressure. <ref>http://www.fas.org/sgp/crs/mideast/RS20871.pdf, Kenneth Katzman </ref> Nonetheless, Ahmadinejad has been called to questioning by parliament on a number of occasions, to justify his position on issues concerning domestic politics. His ideologies seem to have alienated a large portion of the parliament, and stand in contrast to the standpoint of the Supreme Leader<ref>http://www.time.com/time/world/article/0,8599,2109154,00.html</ref>.<ref>http://www.nytimes.com/2012/03/15/world/middleeast/iran-ahmadinejad-questioned-before-parliament-majlis.html?pagewanted=all</ref>.


⚫
“• The EU oil embargo and the restrictions on transactions with [[Central Bank of Iran|Iran’s Central Bank]] have dramatically reduced Iran’s oil sales – a fact acknowledged by Oil Minister Rostam Qasemi to the Majles on January 7, 2013. He indicated sales had fallen 40% from the average of 2.5 million barrels per day (mbd) in 2011 (see chart above on Iran oil buyers). This is close to the estimates of energy analysts, which put Iran’s sales at the end of 2012 in a range of 1 mbd to 1.5 mbd. Reducing Iran’s sales further might depend on whether U.S. officials are able to persuade China, in particular, to further cut buys from Iran—and to sustain those cuts.
⚫
A recent report by Dr. Kenneth Katzman, for the ''Congressional Research Service'', listed the following factors as major examples of economic mismanagement on the part of the Iranian government:


⚫
• Iran has been storing some unsold oil on tankers in the [[Persian Gulf]], and it is building new storage tanks on shore. Iran has stored excess oil (21 million barrels, according to [[Citigroup]] Global Markets) to try to keep production levels up—shutting down wells risks harming them and it is costly and time consuming to resume production at a well that has been shut. However, since July 2012, Iran reportedly has been forced to shut down some wells, and overall oil production has fallen to about 2.6 million barrels per day from the level of nearly 4.0 mbd at the end of 2011.
⚫
“• The EU oil embargo and the restrictions on transactions with Iran’s Central Bank have dramatically reduced Iran’s oil sales – a fact acknowledged by Oil Minister Rostam Qasemi to the Majles on January 7, 2013. He indicated sales had fallen 40% from the average of 2.5 million barrels per day (mbd) in 2011 (see chart above on Iran oil buyers). This is close to the estimates of energy analysts, which put Iran’s sales at the end of 2012 in a range of 1 mbd to 1.5 mbd. Reducing Iran’s sales further might depend on whether U.S. officials are able to persuade China, in particular, to further cut buys from Iran—and to sustain those cuts.


⚫
• The oil sales losses Iran is experiencing are likely to produce over $50 billion in hard currency revenue losses in a one-year period at current oil prices. The IMF estimated Iran’s hard currency reserves to be $106 billion as of the end of 2011, and some economists say that figure may have fallen to about $80 billion as of November 2012. Analysts at one outside group, the [[Foundation for the Defense of Democracies]], believe Iran’s hard currency reserves might be exhausted entirely by July 2014 at current rates of depletion. Compounding the loss of oil sales by volume is that many of its oil transactions reportedly are now conducted on a barter basis—or in exchange for gold, which is hard currency but harder to
⚫
• Iran has been storing some unsold oil on tankers in the Persian Gulf, and it is building new storage tanks on shore. Iran has stored excess oil (21 million barrels, according to Citigroup Global Markets) to try to keep production levels up—shutting down wells risks harming them and it is costly and time consuming
to resume production at a well that has been shut. However, since July 2012, Iran reportedly has been forced to shut down some wells, and overall oil production has fallen to about 2.6 million barrels per day from the level of nearly 4.0 mbd at the end of 2011.

• The oil sales losses Iran is experiencing are likely to produce over $50 billion in hard currency revenue losses in a one-year period at current oil prices. The IMF estimated Iran’s hard currency reserves to be $106 billion as of the end of 2011, and some economists say that figure may have fallen to about $80 billion as of
⚫
November 2012. Analysts at one outside group, the Foundation for the Defense of Democracies, believe Iran’s hard currency reserves might be exhausted entirely by July 2014 at current rates of depletion.62 Compounding the loss of oil sales by volume is that many of its oil transactions reportedly are now conducted on a barter basis—or in exchange for gold, which is hard currency but harder to
use than cash. And, the February 6, 2013, imposition of sanctions on Iran’s ability to repatriate hard currency could cause the depletion rate to increase.
use than cash. And, the February 6, 2013, imposition of sanctions on Iran’s ability to repatriate hard currency could cause the depletion rate to increase.


• To try to stretch its hard currency reserve, on October 15, 2012, Iran said it would not supply hard currency for purchases of luxury goods such as cars or cellphones (the last 2 of the government’s 10 categories of imports, ranked by their importance). The government is still supplying hard currency for essential and other key imports. Importers for essential goods can obtain dollars at the
• To try to stretch its hard currency reserve, on October 15, 2012, Iran said it would not supply hard currency for purchases of luxury goods such as cars or cellphones (the last 2 of the government’s 10 categories of imports, ranked by their importance). The government is still supplying hard currency for essential and other key imports. Importers for essential goods can obtain dollars at the official rate of 12,260 to the dollar, and importers of other key categories of goods can obtain dollars at a new rate of 28,500 to the dollar. The regime has also threatened to arrest the unofficial currency traders who sell dollars at less than the rate of about 28,500 to the dollar. The few unofficial traders that remain active are said to be trading at approximately that rate so as not to risk arrest.
official rate of 12,260 to the dollar, and importers of other key categories of goods can obtain dollars at a new rate of 28,500 to the dollar. The regime has also threatened to arrest the unofficial currency traders who sell dollars at less than the rate of about 28,500 to the dollar. The few unofficial traders that remain active are said to be trading at approximately that rate so as not to risk arrest.

• Some Iranians and outside economists worry that hyperinflation might result.
⚫
The Iranian Central Bank estimated on January 9, 2013 that the inflation rate is about 27%—the highest rate ever acknowledged by the Bank—but many economists believe the actual rate is between 50% and 70%. This has caused Iranian merchants to withhold goods or shut down entirely because they are
unable to set accurate prices. Almost all Iranian factories depend on imports and the currency collapse has made it difficult for Iranian manufacturing to operate.


⚫
• Some Iranians and outside economists worry that [[hyperinflation]] might result. The [[Central Bank of Iran|Iranian Central Bank]] estimated on January 9, 2013 that the inflation rate is about 27%—the highest rate ever acknowledged by the Bank—but many economists believe the actual rate is between 50% and 70%.{{fact}} This has caused Iranian merchants to withhold goods or shut down entirely because they are unable to set accurate prices. Almost all Iranian factories depend on imports and the currency collapse has made it difficult for Iranian manufacturing to operate.
⚫
• Beyond the issue of the cost of imported goods, the Treasury Department’s designations of affiliates and ships belong to Islamic Republic of Iran Shipping Lines (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have further raised the prices of goods to Iranian import-export dealers. Some ships
have been impounded by various countries for nonpayment of debts due on them.


⚫
• Beyond the issue of the cost of imported goods, the Treasury Department’s designations of affiliates and ships belong to [[Islamic Republic of Iran Shipping Lines]] (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have further raised the prices of goods to Iranian import-export dealers. Some ships have been impounded by various countries for nonpayment of debts due on them.
⚫
• Suggesting Iran’s operating budget is already struggling; some reports say the government has fallen behind in its payments to military personnel and other government workers. Others say the government has begun “means testing” in order to reduce social spending payments to some of the less needy families. In late 2012, it also postponed phase two of an effort to wean the population off subsidies, in exchange for cash payments of about $40 per month to 60 million Iranians. Phase one of that program began in December 2010 after several years of debate and delay, and was praised for rationalizing gasoline prices. Gasoline prices now run on a tiered system in which a small increment is available at the subsidized price of about $1.60 per gallon, but amounts above that threshold are available only at a price of about $2.60 per gallon, close to the world price. Before the subsidy phase out, gasoline was sold for about 40 cents per gallon.


⚫
• Suggesting Iran’s operating budget is already struggling; some reports say the government has fallen behind in its payments to military personnel and other government workers. Others say the government has begun “means testing” in order to reduce social spending payments to some of the less needy families. In late 2012, it also postponed phase two of [[Iranian targeted subsidy plan|an effort to wean the population off subsidies]], in exchange for cash payments of about $40 per month to 60 million Iranians. Phase one of that program began in December 2010 after several years of debate and delay, and was praised for rationalizing gasoline prices.{{clarify}} Gasoline prices now run on a tiered system in which a small increment is available at the subsidized price of about $1.60 per gallon, but amounts above that threshold are available only at a price of about $2.60 per gallon, close to the world price. Before the subsidy phase out, gasoline was sold for about 40 cents per gallon.
⚫
• Press reports indicate that sanctions have caused Iran’s production of automobiles to fall by about 40% from 2011 levels. Iran produces cars for the domestic market, such as the Khodro, based on licenses from European auto makers such as Renault and Peugeot. The currency collapse has largely overtaken the findings of an IMF forecast, released in October 2012, which Iran would return to economic growth in 2013, after a small decline in 2012. An Economist Intelligence Unit assessment published in late 2012 indicates Iran’s Gross Domestic Product (GDP) likely contracted about 3% in 2012 and will contract an additional 1.2% in 2013. (“Oil Sanctions on Iran: Cracking Under Pressure.”)


⚫
• Press reports indicate that sanctions have caused Iran’s production of automobiles to fall by about 40% from 2011 levels. Iran produces cars for the domestic market, such as the [[Iran Khodro|Khodro]], based on licenses from European auto makers such as Renault and Peugeot. The currency collapse has largely overtaken the findings of an IMF forecast, released in October 2012, which Iran would return to economic growth in 2013, after a small decline in 2012. An [[Economist Intelligence Unit]] assessment published in late 2012 indicates Iran’s [[Gross Domestic Product]] (GDP) likely contracted about 3% in 2012 and will contract an additional 1.2% in 2013. (“Oil Sanctions on Iran: Cracking Under Pressure.”)
⚫
• Mitigating some of the effects are that some private funds are going into the Tehran stock exchange and hard assets, such as property. However, this trend generally benefits the urban elite.” <ref>http://www.fas.org/sgp/crs/mideast/RS20871.pdf Dr. Kenneth Katzman </ref>


⚫
• Mitigating some of the effects are that some private funds are going into the [[Tehran Stock Exchange]] and hard assets, such as property. However, this trend generally benefits the urban elite. <ref>http://www.fas.org/sgp/crs/mideast/RS20871.pdf Dr. Kenneth Katzman </ref>
Political ambitions will come to the forefront more steadily as the 2013 Iranian presidential elections slowly approach. Iran is set to go into talk with the international community at the end of February. After major delays, Iran is set to into talks with the international community February 26, 2013.


===Effect on oil price===
===Effect on oil price===

Revision as of 12:05, 19 February 2013

Sanctions have hit Iranian markets heavily since the beginning of 2011.

Numerous nations and multinational entities impose sanctions against Iran. Sanctions commonly bar nuclear, missile and certain military exports to Iran; investments in oil, gas and petrochemicals; exports of refined petroleum products; business dealings with the Iranian Republican Guard Corps; banking and insurance transactions, including with the Central Bank of Iran; and shipping. The United States imposed sanctions on Iran following the Islamic revolution of 1979, while more recent rounds of sanctions by the U.S. and other entities were motivated by Iran's alleged nuclear weapons program.[1]

UN sanctions against Iran

  • United Nations Security Council Resolution 1696 – passed on 31 July 2006. Demanded that Iran suspend all enrichment-related and reprocessing activities and threatened sanctions.
  • United Nations Security Council Resolution 1737 – passed on 23 December 2006. Made mandatory for Iran to suspend enrichment-related and reprocessing activities and cooperate with the IAEA, imposed sanctions banning the supply of nuclear-related materials and technology, and froze the assets of key individuals and companies related to the program.
  • United Nations Security Council Resolution 1747 – passed on 24 March 2007. Imposed an arms embargo and expanded the freeze on Iranian assets.
  • United Nations Security Council Resolution 1803 – passed on 3 March 2008. Extended the asset freezes and called upon states to monitor the activities of Iranian banks, inspect Iranian ships and aircraft, and to monitor the movement of individuals involved with the program through their territory.
  • United Nations Security Council Resolution 1835 – Passed in 2008.
  • United Nations Security Council Resolution 1929 – passed on 9 June 2010. Banned Iran from participating in any activities related to ballistic missiles, tightened the arms embargo, travel bans on individuals involved with the program, froze the funds and assets of the Iranian Revolutionary Guard and Islamic Republic of Iran Shipping Lines, and recommended that states inspect Iranian cargo, prohibit the servicing of Iranian vessels involved in prohibited activities, prevent the provision of financial services used for sensitive nuclear activities, closely watch Iranian individuals and entities when dealing with them, prohibit the opening of Iranian banks on their territory and prevent Iranian banks from entering into relationship with their banks if it might contribute to the nuclear program, and prevent financial institutions operating in their territory from opening offices and accounts in Iran.
  • United Nations Security Council Resolution 1984 – passed on 9 June 2011. This resolution extended the mandate of the panel of experts that supports the Iran Sanctions Committee for one year.
  • United Nations Security Council Resolution 2049 – passed on 7 June 2012. Renewed the mandate of the Iran Sanctions Committee’s Panel of Experts for 13 months.

EU sanctions against Iran

See also: European Union sanctions against Iran

The European Union has imposed restrictions on cooperation with Iran in foreign trade, financial services, energy sectors and technologies, and banned the provision of insurance and reinsurance by insurers in member states to Iran and Iranian-owned companies.[2] On 23 January 2012, the EU agreed to an oil embargo on Iran, effective from July, and to freeze the assets of Iran's central bank.[3] The next month, Iran symbolically pre-empted the embargo by ceasing sales to Britain and France (both countries had already almost eliminated their reliance on Iranian oil, and Europe as a whole had nearly halved its Iranian imports), though some Iranian politicians called for an immediate sales halt to all EU states, so as to hurt countries like Greece, Spain and Italy who were yet to find alternative sources.[4][5]

On 17 March 2012, all Iranian banks identified as institutions in breach of EU sanctions were disconnected from the SWIFT, the world's hub of electronic financial transactions.

One side effect of the sanctions is that the global shipping insurers based in London are unable to provide cover for items as far afield as Japanese shipments of Iranian liquefied petroleum gas to South Korea.[6]

Bilateral sanctions against Iran

See also: U.S. sanctions against Iran
  • Australia has imposed financial sanctions and travel bans on individuals and entities involved in Iran's nuclear and missile programs or assist Iran in violating sanctions, and an arms embargo.[7]
  • Canada imposed a ban on dealing in the property of designated Iranian nationals, a complete arms embargo, oil-refining equipment, items that could contribute to the Iranian nuclear program, the establishment of an Iranian financial institution, branch, subsidiary, or office in Canada or a Canadian one in Iran, investment in the Iranian oil and gas sector, relationships with Iranian banks, purchasing debt from the Iranian government, or providing a ship or services to Islamic Republic of Iran Shipping Lines, but allows the Foreign Minister to issue a permit to carry out a specified prohibited activity or transaction.[8]
  • India enacted a ban on the export of all items, materials, equipment, goods, and technology that could contribute to Iran's nuclear program.[9] In 2012, the country said it was against expanding its sanctions.[10] India imports 12 percent of its oil from Iran and cannot do without it,[11] and the country plans to send a "huge delegation" to Iran in mid-March 2012 to further bilateral economic ties.[12][13] In July 2012, India has not approved the necessary insurance for Iranian ships hit by U.S. sanctions, effectively barring them from entering Indian waters.[14]
  • Israel banned business with or unauthorized travel to Iran under a law banning ties with enemy states.[15] Israel has also enacted legislation that penalizes any companies that violate international sanctions.[16] Following reports of covert Israeli-Iranian trade and after the US sanctioned an Israeli company for ties with Iran, Israel imposed a series of administrative and regulatory measures to prevent Israeli companies from trading with Iran, and announced the establishment of a national directorate to implement the sanctions.[17]
  • Japan imposed a ban on transactions with some Iranian banks, investments with the Iranian energy sector, and asset freezes against individuals and entities involved with Iran's nuclear program.[18] In January 2012, the second biggest customer for Iranian oil announced it would take "concrete steps" to reduce its 10% oil dependency on Iran.[19]
  • South Korea imposed sanctions on 126 Iranian individuals and companies.[20] Japan and South Korea together account for 26% of Iran's oil exports.[21]
  • Switzerland banned the sale of arms and dual-use items to Iran, and of products that could be used in the Iranian oil and gas sector, financing this sector, and restrictions on financial services.[22]
  • The United States has imposed an arms ban and an almost total economic embargo on Iran, which includes sanctions on companies doing business with Iran, a ban on all Iranian-origin imports, sanctions on Iranian financial institutions, and an almost total ban on selling aircraft or repair parts to Iranian aviation companies. A license from the Treasury Department is required to do business with Iran. In June 2011, the United States imposed sanctions against Iran Air and Tidewater Middle East Co. (which runs seven Iranian ports), stating that Iran Air had provided material support to the Iranian Revolutionary Guard Corps (IRGC), which is already subject to UN sanctions, that Tidewater Middle East is owned by the IRGC, and that both have been involved in activities including illegal weapons transportation.[23] The U.S. has also begun to designate a number of senior Iranian officials under the Iranian Human Rights Abuses Sanctions Regulations. On December 14, 2011, the U.S. Department of Treasury designated Hassan Firouzabadi and Abdollah Araqi under this sanctions program.[24] In February 2012 the US froze all property of the Central Bank of Iran and other Iranian financial institutions, as well as that of the Iranian government, within the United States.[25] The American view is that sanctions should target Iran's energy sector that provides about 80% of government revenues, and try to isolate Iran from the international financial system.[26] On Feb 6th of 2013 the United States government blacklisted major Iranian electronics producers, Internet policing agencies, and the state broadcasting authority, in an effort to lessen restrictions of access to information for the general public. The sanctions were imposed to target Islamic Republic of Iran Broadcasting, which is responsible for broadcast policy in Iran and oversees production of Iranian television and radio channels. Also targeted were the “Iranian Cyber Police” and the “Communications Regulatory Authority” which the Treasury Department describes as authorities created three years ago to filter Web sites and monitor Internet behavior, while blocking Web sites deemed objectionable by the Iranian government. Currently, under American sanctions laws, any United States property held by blacklisted companies and individuals is impounded, and are prohibited from engaging in any transactions with American citizens.[27]

Effects

See also: Smuggling in Iran

U.S. and EU leaders are trying to tighten restrictions on business with Iran, which produced 3.55 million barrels of crude a day in January, 11 percent of OPEC's total, according to data compiled by Bloomberg. Oil sales earned Iran $73 billion in 2010, accounting for about 50 percent of government revenue and 80 percent of exports, the U.S. Energy Department estimates.[28]

—Bloomberg, 13 February 2012

The sanctions bring difficulties to Iran's $352 billion, oil-dominated economy.[3] Data published by the Iranian Central Bank show a declining trend in the share of Iranian exports from oil-products (2006/2007: 84.9%, 2007/2008: 86.5%, 2008/2009: 85.5%, 2009/2010: 79.8%, 2010/2011 (first three quarters): 78.9%).[29] The sanctions have had a substantial adverse effect on the Iranian nuclear program by making it harder to acquire specialized materials and equipment needed for the program. The social and economic effects of sanctions have also been severe,[30] with even those who doubt their efficacy, such as John Bolton, describing the EU sanctions, in particular, as "tough, even brutal."[31] Iranian foreign minister Ali Akhbar Salehi conceded that the sanctions are having an impact.[32] China has become Iran's largest remaining trading partner.[18]

Sanctions have reduced Iran's access to products needed for the oil and energy sectors, have prompted many oil companies to withdraw from Iran, and have also caused a decline in oil production due to reduced access to technologies needed to improve their efficiency.[citation needed] According to Undersecretary of State William Burns, Iran may be annually losing as much as $60 billion in energy investment.[33] Many international companies have also been reluctant to do business with Iran for fear of losing access to larger Western markets.[citation needed] As well as restricting export markets, the sanctions have reduced Iran's oil income by increasing the costs of repatriating revenues in complicated ways that sidestep the sanctions; Iranian analysts estimate the budget deficit for the 2011/2012 fiscal year, which in Iran ends in late March, at between $30bn to $50bn.[34] The effects of U.S. sanctions include expensive basic goods for Iranian citizens, and an aging and increasingly unsafe civil aircraft fleet. According to the Arms Control Association, the international arms embargo against Iran is slowly reducing Iran's military capabilities, largely due to its dependence on Russian and Chinese military assistance. The only substitute is to find compensatory measures requiring more time and money, and which are less effective.[35][36] According to at least one analyst (Fareed Zakaria), the market for imports in Iran is dominated by state enterprises and regime-friendly enterprises, because the way to get around the sanctions is smuggling, and smuggling requires strong connections with the regime. This has weakened Iranian civil society and strengthened the state.[37]

The value of the Iranian rial has plunged since autumn 2011, it is reported to have devalued up to 80%, falling 10% immediately after the imposition of the EU oil embargo.[38] since early October of 2012[39]; causing widespread panic among the Iranian public,[34]. In January 2012, the country raised the interest rate on bank deposits by up to 6 percentage points in order to curtail the rial's depreciation. The rate increase was a setback for Ahmadinejad, who had been using below-inflation rates to provide cheap loans to the poor, though naturally Iranian bankers were delighted by the increase.[34] Not long after, and just a few days after Iran's economic minister declared that "there was no economic justification" for devaluing the currency because Iran's foreign exchange reserves were "not only good, but the extra oil revenues are unprecedented,"[34] the country announced its intention to devalue by about 8.5 percent against the U.S. dollar, set a new exchange rate and vowed to reduce the black market's influence (booming, of course, because of the lack of confidence in the rial).[40] The Iranian Central Bank desperately tried to keep the value of the rial afloat in the midst of the late 2012 decline by pumping petrodollars into the system to allow the rial to compete against the US dollar. [41] Efforts to control inflation rates were set forth by the government through a three-tiered-multiple-exchange-rate[42]; this effect has failed to prevent the rise in cost of basic goods, simultaneously adding to the public's reliance on the Iranian black-market exchange rate network [43]. Government officials attempted to stifle the black-market by offering rates 2% below the alleged black-market rates, but demand seems to be outweighing their efforts.[44][45]

Sanctions tightened further when major supertanker companies said they would stop loading Iranian cargo. Prior attempts to reduce Iran's oil income failed because many vessels are often managed by companies outside the United States and the EU; however, EU actions in January extended the ban to ship insurance. This insurance ban will affect 95 percent of the tanker fleet because their insurance falls under rules governed by European law. "It's the insurance that's completed the ban on trading with Iran," commented one veteran ship broker.[46] This completion of the trading ban left Iran struggling to find a buyer for nearly a quarter of its annual oil exports.[4] Iran has sought to manage the impact of international sanctions and limit capital outflows by promoting a "resistance economy," replacing imports with domestic goods and banning luxury imports,[47] and by providing domestic insurance for tankers shipping Iranian oil.[48] Iran had hoped to sell more to Chinese and Indian refiners, though such attempts seem unlikely to succeed, particularly since China—the single-largest buyer of Iranian crude—has been curtailing its oil imports from Iran down to half their former level.[4]

Another effect of the sanctions, in the form of Iran's retaliatory threat to close the Strait of Hormuz, has led to Iraqi plans to open export routes for its crude via Syria, though Iraq's deputy prime minister for energy affairs doubted Iran would ever attempt a closure.[46]

After Iranian banks blacklisted by the EU were disconnected from the SWIFT banking network, Israeli Finance Minister Yuval Steinitz stated that Iran would now find it more difficult to export oil and import products. According to Steinitz, Iran would be forced to accept only cash or gold, which is impossible when dealing with billions of dollars. Steinitz told the Israeli cabinet that Iran's economy might collapse as a result.[49][50]

The effects of the sanctions are usually denied in the Iranian press.[51][52] Iran has also taken measures to circumvent sanctions, notably by using front countries or companies and by using barter trade.[53] At other times the Iranian government has advocated a "resistance economy" in response to sanctions, such as using more oil internally as export markets dry up and import substitution industrialization of Iran.[54][55]

In October 2012, Iran began struggling to halt a decline in oil exports which could plummet further due to Western sanctions, and the International Energy Agency estimated that Iranian exports fell to a record of 860,000 bpd in September 2012 from 2.2 million bpd at the end of 2011. The results of this fall led to a drop in revenues and clashes on the streets of Tehran when the local currency, the rial, collapsed. The output in September 2012 was Iran's lowest since 1988.[56]

Iranian Foreign Ministry spokesman Ramin Mehmanparast has said that the sanctions were not just aimed at Iran's nuclear program and would continue even if the nuclear dispute was resolved.[57]

In the face of increased economic pressure from the United States and Europe and a marked decrease of oil exports, Iran is seeking to build a resistance economy[58][59] as well as ongoing gold imports from Turkey.[60]

Political Effects

See also: Economy of Iran

The internal politics of Iran are harder to gage in reference to the sanctions which have been laid against Iran since early 2011. There has been a divide between President Ahmadinejad and Supreme Leader Khamenei since early 2011; differences between the two stems more from internal political ambitions than the current effects of international sanctions. Though among most Iranian politicians, the effects of the sanctions are attributed directly to Ahmadinejad’s mismanagement of internal and external economic factors.[citation needed] Furthermore, 94 Iranian Parliamentarians signed a formal request to have Ahmadinejad appear before the “Majles” (parliament) to answer questions about the currency crisis. The Supreme Leader, terminated the parliaments request in order to unify the government in the face of international pressure. [61] Nonetheless, Ahmadinejad has been called to questioning by parliament on a number of occasions, to justify his position on issues concerning domestic politics. His ideologies seem to have alienated a large portion of the parliament, and stand in contrast to the standpoint of the Supreme Leader.[dubious – discuss][62].[63].

A recent report by Dr. Kenneth Katzman, for the Congressional Research Service, listed the following factors as major examples of economic mismanagement on the part of the Iranian government:

“• The EU oil embargo and the restrictions on transactions with Iran’s Central Bank have dramatically reduced Iran’s oil sales – a fact acknowledged by Oil Minister Rostam Qasemi to the Majles on January 7, 2013. He indicated sales had fallen 40% from the average of 2.5 million barrels per day (mbd) in 2011 (see chart above on Iran oil buyers). This is close to the estimates of energy analysts, which put Iran’s sales at the end of 2012 in a range of 1 mbd to 1.5 mbd. Reducing Iran’s sales further might depend on whether U.S. officials are able to persuade China, in particular, to further cut buys from Iran—and to sustain those cuts.

• Iran has been storing some unsold oil on tankers in the Persian Gulf, and it is building new storage tanks on shore. Iran has stored excess oil (21 million barrels, according to Citigroup Global Markets) to try to keep production levels up—shutting down wells risks harming them and it is costly and time consuming to resume production at a well that has been shut. However, since July 2012, Iran reportedly has been forced to shut down some wells, and overall oil production has fallen to about 2.6 million barrels per day from the level of nearly 4.0 mbd at the end of 2011.

• The oil sales losses Iran is experiencing are likely to produce over $50 billion in hard currency revenue losses in a one-year period at current oil prices. The IMF estimated Iran’s hard currency reserves to be $106 billion as of the end of 2011, and some economists say that figure may have fallen to about $80 billion as of November 2012. Analysts at one outside group, the Foundation for the Defense of Democracies, believe Iran’s hard currency reserves might be exhausted entirely by July 2014 at current rates of depletion. Compounding the loss of oil sales by volume is that many of its oil transactions reportedly are now conducted on a barter basis—or in exchange for gold, which is hard currency but harder to use than cash. And, the February 6, 2013, imposition of sanctions on Iran’s ability to repatriate hard currency could cause the depletion rate to increase.

• To try to stretch its hard currency reserve, on October 15, 2012, Iran said it would not supply hard currency for purchases of luxury goods such as cars or cellphones (the last 2 of the government’s 10 categories of imports, ranked by their importance). The government is still supplying hard currency for essential and other key imports. Importers for essential goods can obtain dollars at the official rate of 12,260 to the dollar, and importers of other key categories of goods can obtain dollars at a new rate of 28,500 to the dollar. The regime has also threatened to arrest the unofficial currency traders who sell dollars at less than the rate of about 28,500 to the dollar. The few unofficial traders that remain active are said to be trading at approximately that rate so as not to risk arrest.

• Some Iranians and outside economists worry that hyperinflation might result. The Iranian Central Bank estimated on January 9, 2013 that the inflation rate is about 27%—the highest rate ever acknowledged by the Bank—but many economists believe the actual rate is between 50% and 70%.[citation needed] This has caused Iranian merchants to withhold goods or shut down entirely because they are unable to set accurate prices. Almost all Iranian factories depend on imports and the currency collapse has made it difficult for Iranian manufacturing to operate.

• Beyond the issue of the cost of imported goods, the Treasury Department’s designations of affiliates and ships belong to Islamic Republic of Iran Shipping Lines (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have further raised the prices of goods to Iranian import-export dealers. Some ships have been impounded by various countries for nonpayment of debts due on them.

• Suggesting Iran’s operating budget is already struggling; some reports say the government has fallen behind in its payments to military personnel and other government workers. Others say the government has begun “means testing” in order to reduce social spending payments to some of the less needy families. In late 2012, it also postponed phase two of an effort to wean the population off subsidies, in exchange for cash payments of about $40 per month to 60 million Iranians. Phase one of that program began in December 2010 after several years of debate and delay, and was praised for rationalizing gasoline prices.[clarification needed] Gasoline prices now run on a tiered system in which a small increment is available at the subsidized price of about $1.60 per gallon, but amounts above that threshold are available only at a price of about $2.60 per gallon, close to the world price. Before the subsidy phase out, gasoline was sold for about 40 cents per gallon.

• Press reports indicate that sanctions have caused Iran’s production of automobiles to fall by about 40% from 2011 levels. Iran produces cars for the domestic market, such as the Khodro, based on licenses from European auto makers such as Renault and Peugeot. The currency collapse has largely overtaken the findings of an IMF forecast, released in October 2012, which Iran would return to economic growth in 2013, after a small decline in 2012. An Economist Intelligence Unit assessment published in late 2012 indicates Iran’s Gross Domestic Product (GDP) likely contracted about 3% in 2012 and will contract an additional 1.2% in 2013. (“Oil Sanctions on Iran: Cracking Under Pressure.”)

• Mitigating some of the effects are that some private funds are going into the Tehran Stock Exchange and hard assets, such as property. However, this trend generally benefits the urban elite. [64]

Effect on oil price

According to the U.S. Iran could reduce the world price of crude petroleum by 10%, saving the United States annually $76 billion (at the proximate 2008 world oil price of $100/bbl). Opening Iran’s market place to foreign investment could also be a boon to competitive U.S. multinational firms operating in a variety of manufacturing and service sectors.[65]

The U.S. Energy Department has warned that imposing oil embargoes on Iran would increase world oil prices by widening the gap between supply and demand.[66]

On the other side, according to a US bipartisan study, oil prices "could double" if Iran is permitted to obtain a nuclear weapon.[67] U.S. gross domestic product could fall by about 0.6% in the first year -- costing the economy some $90 billion -- and by up to 2.5% (or $360 billion) by the third year. This is enough, at current growth rates, to send the country into recession.[68]

Humanitarian impact

See also: Healthcare in Iran and Agriculture in Iran

Pharmaceuticals and medical equipments do not fall under international sanctions but the country is facing shortages of drugs for the treatment of 30 illnesses including cancer, heart and breathing problems, thalassemia and multiple sclerosis (MS) because Iran is not allowed to use the international payment systems.[69][70] A teenage boy died from hemophilia due to a shortage of medicine caused by the sanctions on Iran.[71] Delivery of some agricultural products to Iran have also been affected for the same set of reasons.[72]

In 2013, The Guardian reported that some 85,000 cancer patients require chemotherapy and radiotherapy which are now scarce. Iranians with serious illnesses have been put at imminent risk by the unintended consequences of international sanctions, which have led to dire shortages of life-saving medicines such as chemotherapy drugs for cancer and bloodclotting agents for haemophiliacs. Western governments have built waivers into the sanctions regime to ensure that essential medicines get through, but those waivers are not functioning, as they conflict with blanket restrictions on banking, as well as bans on "dual-use" chemicals which might have a military application. In addition, there are 40,000 haemophiliacs who can't get anti-clotting medicines. Operations on haemophiliacs have been virtually suspended because of the risks created by the shortages. An estimated 23,000 Iranians with HIV/AIDS have had their access to the drugs they need to keep them alive severely restricted. The society representing the 8,000 Iranians suffering from thalassaemia, an inherited blood disorder, has said its members are beginning to die because of a lack of an essential drug, deferoxamine, used to control the iron content in the blood. To make matters worse, Iran can no longer buy medical equipment such as autoclaves (sterilising machines), essential for the production of many drugs because some of the biggest western pharmaceutical companies refuse to have anything to do with Iran.[73]

In recent reports, the development of a medicinal black market has come to the forefront of international news, a desperate population in resorting to any means to obtains, at time life saving medications.[74] Though vital medicines are not effected by sanctions directly, the amount of hard currency being made available to the Minister of Health is what's causing a huge backlash on the amount of vital medicines being made available to the public. Iran's first female Minister Marziyeh Vahid Dastjerdi (since the Iranian Revolution) was dismissed in December for speaking out against the lack of support from the government in times of economic hardship[75]. Furthermore, Iranian patients are at risk of amplified side effects and reduced effectiveness because Iran is forced to import more medicines, and chemical building blocks for other medicines, from India and China, thereby replacing the higher quality products from Western manufacturers. Imports from American and European drug makers were down by an estimated 30 percent in 2012 and falling. Given the nature of patents in the world of pharmaceuticals, substitutions for advanced medicines is often unattainable, particularly when it comes to diseases such as cancer and multiple sclerosis.[76]

Frozen assets

See also: Foreign exposure and transactions of Iran

After the Iranian Revolution in 1979, the United States ended its economic and diplomatic ties with Iran, banned Iranian oil imports and froze approximately $11 billion of its assets.[77]

In recent years, billions of dollars of Iranian assets abroad have been seized or frozen, including a building in New York City, and bank accounts in Great Britain, Luxembourg, Japan and Canada.[78][79][80][81][82][dubious – discuss]

In 2012, Iran reported that the assets of Guard-linked companies in several countries have been frozen but in some cases the assets have been returned.[83]

See also

References

  1. ^ Ariel Zirulnick (24 February 2011). "Sanction Qaddafi? How 5 nations have reacted to sanctions: Iran". The Christian Science Monitor. Retrieved 13 February 2012.
  2. ^ Akbar E. Torbat, EU Embargoes Iran over the Nuke Issue, July 8, 2012, http://www.informationclearinghouse.info/article31795.htm
  3. ^ a b Ladane Nasseri (12 February 2012). "Iran Won't Yield to Pressure, Foreign Minister Says; Nuclear News Awaited". Bloomberg. Retrieved 13 February 2012.
  4. ^ a b c Javier Blas (20 February 2012). "Iran struggles to find new oil customers". The Financial times. Retrieved 21 February 2012. {{cite news}}: Unknown parameter |coauthor= ignored (|author= suggested) (help)
  5. ^ "Iran stops oil sales to British, French companies". Reuters. 19 February 2012. Retrieved 19 February 2012. Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent . . . by more than a third—or over 300,000 barrels daily. . . . Iran was supplying more than 700,000 barrels per day to the EU plus Turkey in 2011, industry sources said.
  6. ^ "EU sanctions bring Iran's LPG exports to near halt". Reuters. 31 October 2012. Retrieved 1 November 2012.
  7. ^ Government of Australia, Australia's autonomous sanctions: Iran, July 29, 2010
  8. ^ Government of Canada, Sanctions against Iran, July 26, 2010
  9. ^ "India imposes more sanctions on Iran". The Hindu. 1 April 2011. Retrieved 13 February 2012.
  10. ^ Sandeep Dikshit (11 February 2012). "India against more sanctions on Iran". The Hindu. Chennai, India. Retrieved 13 February 2012.
  11. ^ "India won't cut Iranian oil imports despite US, EU sanctions: Pranab Mukherjee". The Times of India. Reuters. 30 January 2012. Retrieved 13 February 2012.
  12. ^ "Govt wants more exports to Iran". The Times of India. TNN. 10 February 2012. Retrieved 13 February 2012.
  13. ^ "Payment issue with Iran resolved: FIEO". The Economic Times. 2 March 2012. Retrieved 3 March 2012.
  14. ^ Mehdudia, Sujay (27 July 2012). "India bans U.S.-sanctioned Iranian ships from its waters". The Hindu. Chennai, India. {{cite news}}: Unknown parameter |Title= ignored (|title= suggested) (help)
  15. ^ Attila Somfalvi (30 May 2011). "PM clarifies: Ties with Iran forbidden". Yedioth Ahronoth. Retrieved 13 February 2011.
  16. ^ France 24, "Israel to 'finally' impose sanctions on Iran", March 3, 2011
  17. ^ Herb Keinon (26 June 2011). "Gov't expands economic sanctions against Iran". The Jerusalem Post. Retrieved 13 February 2012.
  18. ^ a b "Japan imposes new Iran sanctions over nuclear programme". BBC News. 3 September 2010. Retrieved 13 February 2012.
  19. ^ "Q&A: Iran sanctions". BBC News. 6 February 2012. Retrieved 13 February 2012.
  20. ^ Choe Sang-Hun (8 September 2010). "South Korea Aims Sanctions at Iran". The New York Times. Retrieved 14 February 2012.
  21. ^ "Japan 'to reduce Iran oil imports'". BBC News. 12 January 2012. Retrieved 13 February 2012.
  22. ^ Reid, Katie (19 January 2011). "Switzerland brings Iran sanctions in line with EU". Reuters. Retrieved 25 February 2012.
  23. ^ Daniel Dombey (24 June 2011). "US widens scope of Iran sanctions". The Financial Times. Retrieved 14 February 2012.
  24. ^ OFAC Targets Two Iranians for SDN Designations, Sanction Law, December 14, 2011
  25. ^ Jackie Calmes (6 February 2012). "Obama Imposes Freeze on Iran Property in U.S." The New York Times. Retrieved 13 February 2012. {{cite news}}: Unknown parameter |coauthor= ignored (|author= suggested) (help)
  26. ^ Kenneth Katzman (3 February 2011). "Summary" (PDF). Iran Sanctions. Congressional Research Service. Retrieved 13 February 2012.
  27. ^ http://www.nytimes.com/2013/02/07/world/middleeast/united-states-announces-new-iran-sanctions.html?_r=2&
  28. ^ Isaac Arnsdorf (13 February 2012). "Iran Sanctions Tighten as Shippers Stop Loading". Bloomberg. Retrieved 13 February 2012.
  29. ^ Iranian National Bank. "Economic Trends No 62, Third Quarter 1389 (2010/2011), Balance of Payments, p.16".
  30. ^ Editorial (17 February 2012). "Time to test Iran's nuclear intentions". The Financial Times. Retrieved 19 February 2012. Ratcheted-up sanctions, including an imminent oil embargo and the obstruction of Iran's ability to finance its trade, are having a big impact on the Iranian economy.
  31. ^ John R. Bolton (26 January 2012). "Don't Let Iran Benefit From EU Financial Crisis". Bloomberg. Retrieved 27 January 2012. [S]unny propaganda about the impact of economic sanctions on Iran is emanating from the Obama administration . . . however, there are only two possible outcomes: Either Iran gets nuclear weapons or it doesn't. To ensure that it doesn't, the only viable option is to break Iran's weapons program militarily.
  32. ^ Rick Gladstone (20 December 2011). "Iran Admits Western Sanctions Are Inflicting Damage". The New York Times. Retrieved 13 February 2012.
  33. ^ Flavia Krause-Jackson (1 December 2010). "Sanctions Cost Iran $60 Billion in Oil Investments, Burns Says". Bloomberg. Retrieved 13 February 2012.
  34. ^ a b c d Najmeh Bozorgmehr (25 January 2012). "Iran raises interest rate on bank deposits". The Financial Times. Retrieved 27 January 2012.
  35. ^ "The UN Sanctions' Impact on Iran's Military". Issue Brief – Volume 1, Number 7. Arms Control Association. 11 June 2010. Retrieved 13 February 2012.
  36. ^ "Toward a Negotiated Solution – Solving the Iranian Nuclear Puzzle Briefing Series". Arms Control Association. 20 January 2011. Retrieved 13 February 2012.
  37. ^ Fareed Zakaria (26 October 2011). "To deal with Iran's nuclear future, go back to 2008". The Washington Post. Retrieved 27 January 2012.
  38. ^ "Iran's rial drops 10 percent as EU bans oil imports". Al Arabiya. Reuters. 23 January 2012. Retrieved 27 January 2012.
  39. ^ http://www.bbc.co.uk/news/business-19786662
  40. ^ Ladane Nasseri (26 January 2012). "Iran Central Bank Will Devalue Rial 8.5% Against Dollar as Sanctions Bite". Bloomberg. Retrieved 26 January 2012.
  41. ^ http://www.bbc.co.uk/news/business-19800532
  42. ^ http://www.imf.org/external/pubs/ft/wp/1999/wp9915.pdf
  43. ^ http://www.bbc.co.uk/news/business-19800532
  44. ^ http://www.ft.com/cms/s/0/d3396c9c-1c4e-11e2-a63b-00144feabdc0.html#axzz2Kkf9GUJG
  45. ^ http://www.cato.org/blog/irans-lying-exchange-rates
  46. ^ a b Kadhim Ajrash (12 February 2012). "Iraq Opens Offshore Oil Facility to Boost Export Capacity in Persian Gulf". Bloomberg. Retrieved 13 February 2012. {{cite news}}: Unknown parameter |coauthor= ignored (|author= suggested) (help)
  47. ^ "Iran bans 'luxury' imports in bid to boost sanctions-hit economy". Associated Press. 8 November 2012. Retrieved 12 November 2012.
  48. ^ "Insurance bans on oil tankers save Iran $700m: Official". PressTV`. 12 September 2012. Retrieved 12 November 2012.
  49. ^ http://www.ynetnews.com/articles/0,7340,L-4204264,00.html
  50. ^ Saeed Kamali Dehghan (24 February 2012). "Tehran prepares for an unhappy holiday season". London: guardian.co.uk. Retrieved 25 February 2012.
  51. ^ Economic Desk (24 February 2012). "Sanctions not affecting Iran's oil output". Tehran Times. Retrieved 25 February 2012.
  52. ^ "Iran media warned off of reporting negatively on economy, sanctions". Los Angeles Times.
  53. ^ Bengali, Shashank (9 September 2012). "Iran finds ways around sanctions targeting oil sales". Los Angeles Times. Retrieved 2 October 2012.
  54. ^ "Iran mulls cut to crude oil sale."
  55. ^ "Iran develops ‘economy of resistance’."
  56. ^ "IEA: Iran's oil exports fell, may slip further". Reuters. The Jerusalem Post. 12 October 2012. Retrieved 14 October 2012.
  57. ^ "Iran decries Western governments analysis about sanctions on Iran."
  58. ^ Farideh Farhi (July 27, 2012).Sanctions and the shaping of Iran’s“Resistance Economy” LobeLog.com-Foreign Policy. Retrieved 9 February 2013.
  59. ^ T. Erdbrink and D. Sanger (February 6, 2013).“U.S. Increases Pressure of Economic War on Tehran” The New York Times. Retrieved 9 February 2013.
  60. ^ Turkey will not halt gold flow to Iran, demand may fall Reuters. Retrieved 9 February 2013.
  61. ^ http://www.fas.org/sgp/crs/mideast/RS20871.pdf, Kenneth Katzman
  62. ^ http://www.time.com/time/world/article/0,8599,2109154,00.html
  63. ^ http://www.nytimes.com/2012/03/15/world/middleeast/iran-ahmadinejad-questioned-before-parliament-majlis.html?pagewanted=all
  64. ^ http://www.fas.org/sgp/crs/mideast/RS20871.pdf Dr. Kenneth Katzman
  65. ^ Dean A. DeRosa & Gary Clyde Hufbauer: "Normalization of Economic Relations". (U.S.) National Foreign Trade Council. November 21, 2008. Retrieved March 30, 2012.
  66. ^ Oil sanctions on Iran to worsen global market: US. PressTV, October 29, 2012. Retrieved November 11, 2012.
  67. ^ http://freebeacon.com/the-economic-consequences-of-iranian-nukes/
  68. ^ http://www.washingtoninstitute.org/policy-analysis/view/the-economic-cost-of-a-nuclear-iran
  69. ^ http://payvand.com/news/12/may/1062.html
  70. ^ Dehghan, Saeed Kamali (14 November 2012). "Haemophiliac Iranian boy 'dies after sanctions disrupt medicine supplies'". The Guardian.
  71. ^ http://rt.com/news/iranian-boy-dies-sanctions-880/
  72. ^ Saul, Jonathan; George, Marcus (28 November 2012). "Sanctions side effect hits Iran's food system". Reuters.
  73. ^ Borger, Julian; Dehghan, Saeed Kamali (13 January 2013). "Iran unable to get life-saving drugs due to international sanctions". The Guardian.
  74. ^ http://bigstory.ap.org/article/irans-medical-crisis-deepens-economy-sputters
  75. ^ http://www.thetimes.co.uk/tto/news/world/middleeast/article3641694.ece
  76. ^ http://www.wilsoncenter.org/sites/default/files/sanctions_medical_supply_shortages_in_iran.pdf
  77. ^ Suzanne Maloney (2010): "The Revolutionary Economy". United States Institute of Peace. Retrieved November 17, 2010.
  78. ^ http://www.washingtonpost.com/wp-dyn/content/article/2008/12/17/AR2008121703844_pf.html
  79. ^ http://previous.presstv.com/detail/98465.htm?sectionid=351020101
  80. ^ http://www.reuters.com/article/idUSTRE5BB0ID20091212
  81. ^ http://www.ft.com/cms/s/0/4c20d056-a00c-11e1-90f3-00144feabdc0.html
  82. ^ http://news.nationalpost.com/2012/11/01/irans-canadian-assets-frozen-over-13m-u-s-terrorism-payout/
  83. ^ http://www.pbs.org/wgbh/pages/frontline/tehranbureau/2012/07/news-industry-and-trade-minister-western-sanctions-paralyzing-iran.html#ixzz22HhsEyZU
Videos

Retrieved from "https://en.wikipedia.org/w/index.php?title=International_sanctions_against_Iran&oldid=539027778"