via Lobe Log

The US and EU are touting Iran’s currency woes as proof that sanctions are working, though it’s not clear to what end. The Wall Street Journal reports that the Western powers “are working on new coordinated measures intended to accelerate the recent plunge of Iran’s currency and drain its foreign-exchange reserves”:

The first salvos in this stepped-up sanctions campaign are expected at a meeting of EU foreign ministers on Oct. 15, including a ban on Iranian natural-gas exports and tighter restrictions on transactions with Tehran’s central bank, European officials said.

The U.S. and EU are also considering imposing a de facto trade embargo early next year by moving to block all export and import transactions through Iran’s banking system ….

To that end, U.S. lawmakers are drafting legislation that would require the White House to block all international dealings with Iran’s central bank, while also seeking to enforce a ban on all outside insuring of Iranian companies.

David Cohen, who coordinates the US’s Iran sanctions policy from within the Treasury, outlined the US’s stance in a speech before a British think tank. Reuters reports:

[David] Cohen, undersecretary for terrorism and financial intelligence, added in remarks on a visit to Britain’s Chatham House think-tank that Iran had the ability to “relieve the pressure its people are feeling” by resolving concerns over its nuclear work.

“What in particular has sparked the most recent precipitous decline in the rial, I’m not in a position to say on a granular basis,” he said, adding however that over the past year it had fallen substantially.

The Washington Post also reported that EU officials are “even more blunt” over the intentions behind the sanctions:

One senior European official said the goal of the tightened sanctions was to “bring the Iranian economy to its knees,” and to “make it in a way that really hurts the regime more than the population. That is very difficult.”

But US officials are also attempting to downplay the negative effects of the sanctions by blaming the regime. State Department spokeswoman Victoria Nuland said yesterday that “[t]he Iranian state has horribly mismanaged all aspects of their internal situation.” Cohen told the Chatham House audience that the unrest in Iran “is undoubtedly in significant part due to the Iranian government’s own mismanagement of its economy and it is in part due to the effect of sanctions. The Iranian leadership has within its capacity the ability to relieve the pressure its people are feeling.” Secretary of State Hillary Clinton offered the following qualifier:

“They have made their own government decisions– having nothing to do with the sanctions– that have had an impact on the economic conditions inside of the country,”" Mrs. Clinton said. “Of course, the sanctions have had an impact as well, but those could be remedied in short order if the Iranian government were willing to work with. . .the international community in a sincere manner.”

Meanwhile the hawkish advocacy group United Against a Nuclear Iran (UANI) is urging the US to increase sanctions to leverage the resulting unrest towards regime change:

The Obama administration, the European Union and others should impose an economic blockade on the Iranian regime. The regime is beginning to experience social and political unrest at an 80% devaluation of its currency, and significantly further devaluation will force Tehran to choose between having a nuclear weapon or a functioning economy. A blockade would even bring about the possibility of the failure of this illicit regime.

An economic blockade would mean that any business, firm, or entity that does work in Iran would be barred from receiving U.S. government contracts, accessing U.S. capital markets, entering into commercial partnerships with U.S. entities, or otherwise doing business in the U.S. or with U.S. entities. It is time for the U.S. and others to use all available economic leverage against the regime.

 According to EU officials, this is the position Congress is now mulling over, since Iran is still able to move its energy exports on East Asian markets like South Korea’s:

“You could see a move for a total embargo,” said a senior European official involved in the sanctions debate. “This could fall in line with what Congress is thinking.”