First Published: 2010-10-13

 

Economic Sanctions and Iranís Nuclear Issue

 

Previous US sanctions prohibiting the sale of civilian aircrafts and its spare parts to Iran resulted in the death of more than 2000 ordinary Iranian civilians over the past few decades, due to plane crashes caused by poorly-maintained civilian fleet, notes Abolghasem Bayyenat.

 

Middle East Online

The political climate surrounding Iranís nuclear issue has dramatically changed over the past few months. The US government has effectively lobbied its allies to impose harsh unilateral sanctions against Iran which go far beyond what is mandated by the last Security Council Resolution against Iranís nuclear program. This raises the question as to whether the current strategy would be likely to meet its ostensible goal of resolving Iranís nuclear issue. I argue here that these new measures are not only most likely to fail to resolve Iranís nuclear issue but will also further aggravate the situation and bring about a lose-lose outcome. The outcome of this new approach to dealing with Iranís nuclear issue is likely to be a loss to two main groups of stakeholders, namely those who are sincerely concerned about the prospects of further nuclear proliferation in the world and the ordinary civilian population of Iran.

While international economic sanctions can undeniably cause some short-term adjustment costs to Iran, the Iranian government can well weather the storm in the long run. What may enable Iran to resist more stringent sanctions are the nature of its economy and precautionary measures taken by the Iranian government in recent years and months. Sustained long-term economic sanctions prohibiting investment in Iranís oil and gas sector may diminish Iranís capacity to earn foreign exchange income by undercutting its capacity to export oil and petrochemical products in the long run. Other types of economic sanctions restricting financial transactions with Iran or prohibiting the export of particular products to Iran are also designed to cause critical shortages in Iran. These measures are meant to exert pressure on the Iranian government by undermining its capacity to provide public services to its own people and to meet domestic demands for critical goods and consumer products, in addition to curtailing Iranís capacity to finance its nuclear program.

These hopes, however, are most likely to not see the light of day. The main reason for this assessment has to do with the nature of the Iranian economy in that Iran maintains domestic capacity to produce most of the products the imports of which are affected by recent sanctions imposed on a unilateral basis by some of its trade partners. Sanctions will actually provide an opportunity for Iranian domestic producers, who had grown disenchanted with the government of Ahmadinejad over the surge of imports under his tenure, to regain their lost share of the home market, as the growing Iranian market will be shut off to competing foreign products. Mounting international sanctions have provided a unique opportunity for domestic producers to outmaneuver the powerful lobby of commercial interests, traditionally allied with the ruling elites, and push for a general curb on imports.

The threat of new economic sanctions has also provided a convenient opportunity for the Iranian officials to champion the cause of domestic producers. In a recent speech, Iranís supreme leader Ayatollah Khamenei called for a stricter regulation of imports in the face of international sanctions. Not long after this speech, Iranís foreign commerce officials announced that the import of over 1300 manufacture products, identified as nonessential by Iranís ministry of industries, are to be prohibited soon. To this, one should add a long list of agricultural products which have been announced earlier to face import ban upon the proposal of Iranís ministry of agriculture. By voluntarily curbing its imports, Iran also hopes to cushion the adverse effects of any possible fall in its foreign exchange revenues to be caused by new international sanctions on its oil and gas sector. These precautionary measures however cannot do away with the short-term costs of the sanctions as it can take some time for Iranian domestic producers to adjust to the new environment. As a result, the prices of consumer goods are expected to experience a temporary rise when these new measures are affected. This, nonetheless, would be far from creating a crisis situation for the Iranian government.

It has also long been considered by US officials that gasoline imports will be Iranís Achillesí heel, given that not long ago Iran was importing almost 40 percent of its domestic gasoline needs in light of its limited domestic refining capacity. That explains why the US Congress went ahead with its long-held threat of imposing sanctions on Iranís gasoline imports. But long before these measures took effect, Iran had taken necessary precautionary measures to meet its domestic gasoline needs in light of an international embargo. Through a combination of price measures and quota restrictions, as well as the expansion of public transportation facilities, Iranian authorities have effectively controlled domestic consumption of gasoline in recent months.

Shifting the operation of several petrochemical plants to the production of gasoline was the last measure taken by Iran to end its reliance on gasoline imports. In a triumphant tone, Iranís minister of petroleum recently announced that his country has achieved self-sufficiency in the production of gasoline. While this announcement was initially met with skepticism by foreign observers, independent sources have verified that Iran has voluntarily halted gasoline purchases from neighboring countries, a fact which resulted in a drastic fall in the gasoline prices in the regional markets recently. Notwithstanding the rhetoric surrounding the announcement of these measures, they bear witness to Iranís success in minimizing the adverse effects of sanctions and ironically making them appear as a blessing in disguise for its economy in the public eyes.

The practical precautionary measures taken by Iran to fend off sanctions harm also point to Iranís intention not to budge on its nuclear position in the face of mounting international sanctions. In case these practical measures were not clearly indicative of Iranís intentions, the recent remark by Iranís supreme leader that his country will not negotiate over its nuclear program while the sanctions are in place, left no doubt that a dual strategy of imposing crippling sanctions on Iran while keeping the door to negotiations open for it will not work to persuade Iran to enter into negotiations in good faith. Harsh economic sanctions affecting the general population of Iran would only feed into the official Iranian narrative that the US government and its Western allies are not only hostile to the Iranian political regime but are also against the welfare and prosperity of the Iranian people at large. Previous US sanctions prohibiting the sale of civilian aircrafts and its spare parts to Iran, which has resulted in the death of more than 2000 ordinary Iranian civilians over the past few decades, due to plane crashes caused by poorly-maintained civilian fleet in Iran, has only helped the Iranian government to portray the US as an unscrupulous power dedicated to advancing its interests at any cost.

If crippling sanctions would not work against Iran, then the only viable solution to Iranís nuclear issue should be found in diplomacy. Any diplomatic solution to Iranís nuclear issue needs to recognize the legitimate interests and concerns of both sides. Iran maintains that the international law gives it every right to develop full nuclear fuel cycle for peaceful purposes and has already realized its goal of developing uranium-enrichment facilities. In light of this crucial fact, it would be unrealistic to set the suspension of uranium enrichment activities by Iran as the goal of negotiations. International negotiations, instead, should aim at ensuring that Iranís nuclear activities would not be diverted to military purposes. Further transparency on the part of Iran and increased international monitoring can alleviate concerns that Iranís nuclear activities may be diverted to military purposes.

Past experiences show that this goal can be within reach if all sides are sincerely interested in resolving Iranís nuclear issue rather than using the issue as a ploy for advancing other agendas. The cold reception of the US toward the deal negotiated between Turkey and Brazil on the one side and Iran on the other over the exchange of Iranís low-enriched uranium stockpile for fuel rods for Tehranís research reactor producing medical isotopes for cancer patients and the US rush toward a new round of Security Council sanctions against Iran has made it more difficult to achieve a genuine settlement of the Iranian nuclear issue in a manner that would reconcile the legitimate interests and concerns of both sides. The outcome of the current US strategy of dealing with Iranís nuclear issue is not expected to be a net gain for either side, nor will it help the cause of those who are sincerely concerned about the further proliferation of nuclear weapons in the world.

Abolghasem Bayyenat is currently a Ph.D candidate of political science at Syracuse University. In the past he has published a number of articles on Iranís nuclear program in American and Iranian media.

 

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