Iran V: Sanctions
Competition
AHC
March 16
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, 2012 The Europeans acted in spite of threats by Iran’s Vice President Mohammed Reza Rahimi and Iranian officers to shut off the flow out oil from the Gulf. They also acted after Mohammad Ali Khatibi, Iran’s OPEC governor said, on January 17, 2012 that, “Applying the scenario of sanctions on Iran’s oil exports to EU members would be economic suicide for the member countries…Regarding the economic crisis in the eurozone, imposing any sanction on Iran’s oil will push European countries into a deeper crisis.” These threats were so exaggerated that they would have rung hollow under any circumstances, but they were particularly hollow because Saudi Arabia’s oil minister, Ali Al-Naimi, had pleased on January 16th that “We are prepared to meet the increase in global demand as a result of any circumstances.” While Iran then responded by indirectly threatening Saudi Arabia, it had no more impact on the Saudis than it did on Europe.71 Moreover, the EU took another critical step, and directed. the EU Society for Worldwide Interbank Financial Telecommunication (SWIFT), to, “discontinue its communications services to Iranian financial institutions that are subject to European sanctions.” SWIFT is essential to Iran’s international banking because it provides secure communications for more than 10,000 financial institutions and corporations in 210 countries. SWIFT reported in 2010 that 19 Iranian member banks and 25 financial institutions used the network over 2 million times during the course of the year.72 These institutions included the Central Bank of Iran and other major Iranian banks, including Bank Melli, Bank Mellat, Tejarat Bank, Bank Refah, Future Bank, Persia International Bank, Post Bank and Europäisch-Iranische Handelsbank, and unlike import sanctions, Iran had no alternative to the use of SWIFT.
The Role of Other Importers As has been pointed out earlier, however, much depends on the policies of other importing states. For sanctions to fully succeed, however, other key importers – the nations shown in Figure V.8 – must also agree to major reductions in imports and actually make these reductions over time. It is far too early to determine how well such efforts to broaden reductions in imports from Iran will succeed, but key exporters like Saudi Arabia have said they will increase production to help make up for the loss of Iranian exports, and key nations like China have already reached out to Saudi Arabia and other Arab exporters to help reduce their dependence on Iran. According to press reports, estimates by Nat Kern in Foreign Reports indicate that China reduced its imports from Iran from an average of 550,000 barrels per day in 2011 to some 285,000 in January 2012. South Korea is discussing reductions of 40,000 barrels a day. It is far too early, however, to know what Iran’s other major importers will do.73
71
Associated Press, Iran warns EU oil embargo would be ‘economic suicide’ for Europe, January 17, 2012.
72
Rick Gladstone and Stephen Castle, “Global Network Expels as Many as 30 of Iran’s Banks in Move to Isolate Its Economy,” New York Times, March 16, 2012, http://www.nytimes.com/2012/03/16/world/middleeast/crucialcommunication-network-expelling-iranian-banks.html?_r=1; Thomas Endbrink and Joby Warrick, “Grim Outlook on Nuclear Talks,” washington Post, March 16, 2012, p. A7. 73
David Ignatius, “A slippery slope,” Washington Post, January 18, 2012, p. A17.
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