Today, July 1st, the European Union followed through on their complete embargo of Iranian oil.
On Sunday, the European Union is putting in place a complete embargo of oil imports from Iran, which was the Continent’s sixth-biggest supplier of crude in 2011.As well, the EU is set to remove insurance for all tankers carrying Iranian oil. This alone has had the effect of perhaps adding South Korea and other nations to the oil embargo against Iran.
Three days ago, the United States imposed a new round of sanctions that could punish any foreign country that buys Iranian oil. However, it has issued six-month exemptions to 20 importers of Iranian oil who have significantly cut their purchases, including China, which has openly opposed the pressure on Iran.
Even before these steps, Iran conceded last week that its oil exports were down 20 to 30 percent. Its currency has plunged more than 40 percent against the dollar since last year. But so far the escalating sanctions, which the Bush administration started and the Obama administration has intensified, have failed in their central goal of forcing Iran’s mullahs to stop enriching uranium. Negotiations have stalled, though it is unclear whether this is a tactical move by Iran or a collapse of the latest diplomatic effort.
Notably, the Obama administration and allied powers have implemented these sanctions in a way that has not resulted in a rise in gas prices, as other suppliers including post-Gaddafi Libya have boosted production.
Unlike Iraq or Libya or North Korea...Iran is not a third-world country carved out of a map by war and colonialism. Where sanctions often only help a dictator hang on for years and years. It is an industrialized nation with a comparatively high standard of living. There is national pride at stake and apparently, many Iranians blame their own leaders for their economic mess.
In Tabriz, in the west, I chatted with the owner of a store selling Nike, Adidas and Saucony sneakers, hugely prized as status symbols. If a young man wants to find a girlfriend, the shop owner explained, the best bet is to wear Nikes.Meanwhile Iran's sole ally in the Middle East, Syrian dictator Bashar al-Assad, is similarly crumbling under intensive sanctions and popular uprising.
But sales have dropped by two-thirds in the last year, he fretted. He added in disgust that some Iranians are in such penury that they attend parties wearing Chinese-made, fake Nikes.
In March, Iran was pushed out of Swift, a banking network for international payments, so the businessman now pays for his imports through the traditional hawala system. That’s an unofficial global network of money-traders. You lug a briefcase of cash to a hawala office in an Iranian bazaar and then ask for it to be made available in Beijing or Los Angeles. This is more expensive and less reliable than a bank transfer, but it’s now the main alternative.
“We are finding a loophole around sanctions,” a hawala trader told me. “The Iranian nation has no other option.”
Economic frustration is compounded because President Mahmoud Ahmadinejad has been lifting subsidies for everything from bread to gasoline — probably sound economic policy, but very unpopular.
Western sanctions have succeeded in another way: Most blame for economic distress is directed at Iran’s own leaders, and discontent appears to be growing with the entire political system. I continually ran into Iranians who were much angrier at their leaders on account of rising prices than on account of the imprisonment of dissidents or Bahais.
“We can’t do business as we used to, and our quality of life is getting worse,” one man, who lost his job as a salesman, said forlornly. “We blame our regime, not Western countries.”
Three years ago, in June 2009, we saw a glimmer of change in Iran. Hundreds of thousands of people filled the streets and squares to demand their democratic rights. Braving beatings, snipers, and arrest in the dead of night.
With any luck, we'll see it again soon. Or at least fear of a 'Persian Spring' will persuade the powers that be in Iran to deal in good faith on their nuclear program.