Is Iran Vulnerable to Sanctions?

Targeted sanctions likely to pose serious problems for the Tehran regime, but it remains defiant.

Is Iran Vulnerable to Sanctions?

Targeted sanctions likely to pose serious problems for the Tehran regime, but it remains defiant.

President Mahmoud Ahmadinejad said recently that further sanctions would not deter Iran from pursuing its nuclear programme. But is it that really true, and if it is, how should the international community approach Iran's nuclear development?

World powers gave Tehran until the end of 2009 to accept a United Nations-brokered deal to send most of Iran's low-enriched uranium, LEU, abroad to be further enriched into reactor fuel by Russia and France in order to be used in Tehran university's reactor. But Iran refused to accept this deal or meet the deadline.

Ahmadinejad has been very clear about his country's position on sanctions in recent years. In September 2008, he said, "World powers can pass UN sanctions resolutions for 100 years without deterring Iran from its nuclear ambitions."

This week, in a speech in southern Iran that was aired on Iran's state television, Ahmadinejad challenged plans by the world powers to consider new sanctions against Iran.

United States secretary of state Hillary Clinton announced further talks among six world powers to explore "the kind and degree of sanctions that we should be pursuing". Ahmadinejad responded by saying, "They issued several resolutions and sanctioned Iran ... They think these things will bring Iran to its knees but they are mistaken." In pursuit of a non-military solution, the US and its allies are weighing focused sanctions against Iran's leadership rather than broad-based penalties that could harm the protest movement, officials and diplomats were quoted as saying by news agencies in December.

But given that Iran is already under three rounds of UN Security Council sanctions over its defiance and refusal to suspend uranium enrichment, are the new measures likely to be any more effective?

Unrest since Iran's June 12 election has changed the nuclear equation for the Iranian government. Before that, there was a belief among Ahmadinejad's supporters that it was time to negotiate with the US over mutual concerns. As a hardliner trusted by Supreme Leader Ali Khamenei, he was in a position to open lines of communication with the US, the "Great Satan" since the 1979 revolution.

That was why in January 2009, Amir Mohebbian, a conservative analyst who writes for Resalat newspaper, suggested in an interview with America's National Public Radio that President Obama write a letter to Khamenei to "break the ice".

The economy has never played a major role in the minds of Iranian leaders or in Iran's national security equation. Before the election, Ahmadinejad had already shown the world his defiance towards the West and Israel. But, three rounds of sanctions, widespread and deadly mismanagement in the administration coupled with lack of principles in the financial system led Iran into a deep economic crisis, resulting in double digit inflation, high unemployment and the ending of many economic projects.

The sanctions, particularly against Iran's financial system and major banks, have gradually weakened the economy. The more Iran grants the Revolutionary Guard, IRGC, control over major projects in the country's oil and gas industry, the more it will feel sanctions due to local and international partners' inability to continue their involvement.

Ahmadinejad's enthusiasm to make the IRGC one of the major state contractors has become a double-edged sword, a report that it provided to the Iranian parliament's budget committee showed. Khatam-ol-Anbia Base, the IRGC's most important financial department, alone owns 812 registered companies inside and outside Iran.

The Iranian government should have said yes to the West's nuclear offer last October but by then the equation had changed for the Iranian leaders. Although the state of the economy, the impact of sanctions and more importantly the prospect of further punishment, might have been alarming for Tehran, the post-election unrest made anti-American and anti-western sentiment the cornerstone of domestic policy.

After the election, Iran put the blame on the US and Britain for their alleged involvement in provoking protests. This month, the government even accused the Obama administration of orchestrating a bomb attack that killed a scientist.

The hard-liners in Tehran used attacks on US and British "enemies" to justify their crackdown and use of unprecedented force to stop people on the streets. That changed the political equation to one of the survival of the regime versus economic benefit.

Anti-Americanism in Iran is not just a political gesture but an institution that has swallowed billions of dollars via the country's gigantic propaganda machine since the 1979 revolution. Tehran has always used alleged support from foreign countries, mainly the US, to suppress its opponents.

Ironically, in place of George Bush in the White House threatening a military attack, Iran is now dealing with a new US president who has based his foreign policy on dialogue and negotiation. The fact that the Obama administration rules out the possibility of a military strike has not led to any change in the Iranian government's attitude towards Washington.

Secretary of Defence Robert Gates has repeatedly discounted the likelihood of a military attack against Iran, saying that it would only "slow Iran's nuclear ambitions by one to three years while driving the programme further underground".

But blaming the West will not put bread and butter on people's plates. The more Iranians take to the streets and the domestic crisis deepens, the more Iran's economic failures stand out. Official figures show that at least 30 per cent of the people live below the poverty line. The government in Tehran can no longer ignore the impact of sanctions and financial restrictions on its economy.

Iran's years of defiance towards the West and its reckless behaviour towards its people have brought it to a dangerous crossroads where both engaging with the international community and acknowledging the demands of the people represent costly moves for the regime. It seems there is no third way. If Iran does not pave the way for a deep political reform, the combination of these two factors will weaken the government in Tehran more than ever.

This will lead to further political unrest that will become an economic crisis, recruiting millions of desperate jobless people to what initially began as a civil rights movement. This is just the kind of thing that brought the Shah's regime to its knees in 1979.

Omid Memarian is an Iranian journalist and blogger based in San Francisco.

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