Just two days after the US government imposed a new round of even more brutal sanctions on Iran’s economy, Saeed Jalili, Secretary of Iran's Supreme National Security Council expressed his nation’s desire to hold talks with the P5+1 nations this January. Iran had shown interest back in October 2012 but decided to wait for the US presidential elections to happen. One then wonders why the United States decided to act antagonistically? Did America doubt Iran’s intentions so much that it felt the need for additional sanctions to deliver the final nudge to bring Iran to talks?
History has witnessed the course of action US and its European allies have chosen when their efforts to engage with Iran have failed, namely sanctions. Recently however many dominant Asian powers have also agreed to resort to this method. America’s use of sanctions against Iran dates back to 1979. Over the years, it has refined the sanctions to target Iran’s nuclear and missile technologies as well as all those parties affiliated with this program. A number of financial sanctions have frozen any American assets held by these parties. It has also extended the sanctions to include any foreign entities engaged in aiding Iran’s nuclear aspirations. Since 2006, Iran’s major banks like Bank Saderat and Bank Melli, have also been subjected to sanctions. Companies having links to groups banned by UN sanctions were also targeted.
In addition to imposing sanctions on Iran’s indigenous companies, US began to approach foreign companies which were helping Iran’s economy by processing its export transactions. The adverse consequences of the Swiss UBS and Dutch ABN Amro soon began to deter other foreign banks from participating in deals related to Iran.
China and Russia have been the most dominant powers opposing sanctions and have repeatedly preferred diplomacy over coercion. China seeks to balance increasing American presence in the Middle East through Iran’s friendship while Russia provides arms to Iran in appreciation for its non-interference in Central Asian politics. Both Russia and China have made large investments in Iran’s energy sector and also depend heavily on its oil imports. Russia has still permitted some sanctions against Iran since the latter is a strong competitor to Russian oil products for the European market.
The impact of sanctions on Iran’s economy is no longer a myth. Oil exports have fallen by half while its currency has depreciated by over 40% since August 2012. Together with banking sanctions, Iran has reported a 45% loss in revenue in the last 9 months. Although price control have made inflation slightly bearable, people estimate average inflation to remain around 50% this year. Supply of food items and especially medicines has become limited. As sanctions begin to affect the lives of more and more people, the greater likelihood of these masses uniting with their government against Western forces cannot be ignored.
World powers and the IAEA believe they have been successful at somewhat slowing down the expansion of Iran’s missile program and clearly demonstrated their stance against the misuse of nuclear power and all terrorist organizations associated with it to the rest of the world. But as sanctions have expanded to target more sources of revenue for Iran, many international powers have also been reigned in into this complicated issue. Last year, Asian powers like China, India and Japan had to decide which side of the sanctions fence they wanted to be when US threated to fine nations for trading with Iran. The same dilemma is present amongst the P5+1 nations in which China and Russian have shown notable opposition against sanctions. This has also impacted international response in other Middle Eastern countries like Syria and Libya.
Despite these drawbacks, Iran has been clever at ameliorating the impact of sanctions. One of the ways it has managed to do so is by selling oil through small third party companies under the tag of “Iraqi special blend”. Similarly, it has started circumventing financial sanctions by bartering with other countries to compensate for the shortages in food, precious metals and commercial supplies in exchange for its petroleum products.
It is therefore, not much of a surprise that the new US sanctions have targeted this practice in particular. In a sweeping move, Iran’s entire energy, port, shipping, shipbuilding sectors and even national media is at risk. The hostility of these sanctions seems to be watered down by the news of ex-senator Hagel possible appointment as US Defense Secretary. Hagel, a well-respected politician and Vietnam veteran, is believed to have a soft spot for Iran; he has on many occasions opposed sanctions and disagreed with military intervention in Iran.
The mixed effect of these two developments on Iran’s actions will be something to follow through. On one hand, the all-rounded nature of the new sanctions could stir up more resentment amongst the Iranians against the Americans, something the Iranian leaders may or may not choose to exploit. But the warm response of Iranian leadership in favor of Hagel’s nomination could instill greater faith in a diplomatic solution.
Considering how deeply embedded the right to uranium enrichment is in Iran’s national discourse, there is a slim chance for a compromise. Khamenei has to however consider how far the economy can tolerate financial sanctions in pursuing nuclear weapons. There is also the concern regarding breaches in security made by foreign intelligence forces which are targeting Iran’s nuclear facilities and personnel associated with the program.
The US and other world powers want Iran’s commitment to abstain from acquiring certain materials and engaging in activities that contribute to the formation of nuclear weapons. Since Iran is unlikely to stop nuclear enrichment completely, the US could consider allowing Iran to carry low-level enrichment activities – up to 5%- so that Iranian leaders can avoid any embarrassment in front to their people and feel that the power differential has been reduced. Hagel’s anti-sanction stance might help make this a reality. As long as enrichment stays at this level, the US together with other nations could agree to ease some of the sanctions especially the ones targeting Iran’s financial institutions. News of Iran slowing down uranium enrichment is another good sign to pursue dialogue. It is important to realize that some cooperation is always better than a military turnout. A new war would have colossal costs and with the damaged states of Iraq and Afghanistan in plain sight, the US is not thrilled to initiate a third war in the Middle East. In addition, a war with Iran would set a domino effect in motion that could jeopardize situations in Afghanistan and Iraq. Iran may decide to use its links with the terrorist organization, Hamas in retaliation by exacerbating the situation in Syria and upsetting peace between Israel and Palestine.
The next round of talks between Iran and P5+1 nations can be an opportunity to avoid these regrettable circumstances. Both sides have to carefully consider which points of conflict they are willing to negotiate over. There is a limit to how many sanctions can be imposed after which they risk becoming counterproductive. A little leeway in developing a nuclear program may help the US reduce Iran’s assistance to anti-state groups propagating insecurity in other Middle-Eastern countries.
ZoneAsia-Pk
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