by Derek Davison
As talks aimed at a comprehensive nuclear deal with Iran continue, with principals from Iran and world powers meeting in Vienna this week, two recent analyses of the negotiations have compared the talks to a “Rubik’s Cube.”
A May 9 report from the International Crisis Group [...]]]>
by Derek Davison
As talks aimed at a comprehensive nuclear deal with Iran continue, with principals from Iran and world powers meeting in Vienna this week, two recent analyses of the negotiations have compared the talks to a “Rubik’s Cube.”
A May 9 report from the International Crisis Group (ICG) entitled, “Iran and the P5+1: Solving the Nuclear Rubik’s Cube,” offers 40 recommended action items that Iran and the P5+1 (the US, UK, France, China and Russia plus Germany) could agree to implement in a comprehensive deal. Today the United States Institute of Peace (USIP) also held a panel discussion called, coincidentally, “The Rubik’s Cube of a Final Iran Deal,” moderated by Colin Kahl, the top Middle East policy official at the Defense Department for most of Obama’s first term, and featuring Robert Einhorn, who served as the State Department’s special advisor on non-proliferation and arms control until less than a year ago, Joe Cirincione, the president of the Ploughshares Fund, and Alireza Nader, an Iran expert at the RAND Corporation.
There’s a clear sense in both analyses that a deal is reachable. Cirincione rightly pointed out at the USIP event that the current talks are “the closest we’ve come to an agreement, ever,” and predicted that “absent some unforeseen event, we are going to get a deal.” Indeed, the very existence of something like the ICG report, a specific and detailed look at what a deal might actually contain, would have appeared presumptuous even six months ago but now seems very reasonable given the progress that has already been made.
However, optimism aside, a great deal of work still needs to be done before a deal can be finalized. The level of detail contained in the ICG report speaks to the complexity involved in the negotiations. The ICG recommends, for example, an immediate cap on Iranian uranium enrichment of 6400 Separative Work Units (SWU, a measurement of enrichment capacity that incorporates both the number and technological advancement of operational centrifuges) per year, which is a steep cut from Iran’s current 9000 SWU/year capacity (that Iran sees as already too low), and one that the Iranians may be unwilling to make. That cap would then be lifted, over 8-10 years, to around 19,000 SWU/year, an increase that could theoretically reduce the time it would take Iran to manufacture a nuclear weapon if it chose to pursue that goal. Of course, it remains to be seen whether Iran and the P5+1 would agree to those terms.
The ICG framed its recommendations around four points:
- constraining any Iranian capacity to build a nuclear weapon;
- implementing a stringent monitoring and verification system on Iran’s nuclear program,
- establishing concrete negative consequences for a breach of the deal by either side;
- and establishing positive consequences for compliance.
But the ICG’s recommendations, and the discussion on the USIP panel, make it very clear that these objectives will be difficult to meet in a way that satisfies both parties. The two sides disagree on even basic elements of the talks; as Kahl explained, the Iranian government rejects the P5+1’s continued focus on Iranian “breakout capacity” because it has officially sworn off of any military application of its nuclear program. The P5+1 does not accept those assurances, but Iran also has legitimate questions as to why other countries with civilian nuclear programs have not been subject to the same requirements that Iran has faced.
The USIP panel seemed to reach a general consensus that the biggest remaining hurdles to a comprehensive deal revolve around Iran’s uranium enrichment program. This includes both Iran’s capacity for enrichment and the amount of enriched uranium it will be allowed to stockpile; the level of access that Iran will permit to the International Atomic Energy Agency (IAEA) and its inspectors; and the timing of and conditions for sanctions relief.
The P5+1 are seeking to maximize the limits on Iran’s nuclear program and the IAEA’s access to Iranian nuclear sites while maintaining sanctions at a high level for a considerable period of time, perhaps decades. Iran, obviously, is seeking the opposite – minimal limits on its nuclear program in return for considerable sanctions relief and only a short period in which its program is subject to international monitoring. As the ICG report put it, “it would appear that the P5+1’s maximum — in terms of both what it considers a tolerable residual Iranian nuclear capability and the sanctions relief it is willing to provide — falls short of Iran’s minimum.”
The single biggest complication to these talks is the utter lack of trust on both sides. As Nader argued, mutual trust is not a requirement for success and the lack of trust can be worked around with stringent inspections requirements and firm commitments to agreed-upon sanctions relief. But that lack of trust adds considerable complexity and difficulty to the negotiations. Iran is ultimately being asked to prove a negative, that it has no nuclear weapons program, and because the P5+1 do not trust Iran to uphold its promises, demands for monitoring requirements and caps on nuclear capacity may simply be too much for Iran to accept.
This is particularly true given a domestic political environment that Nader termed “poisonous,” with Iranian hardliners increasingly concerned about President Hassan Rouhani’s commitment to protecting Iran’s interests in these negotiations, and Supreme Leader Ayatollah Ali Khamenei’s support for the talks vulnerable to shifting political winds.
Iran will also have difficulty trusting the P5+1 to uphold its end of a deal to reduce sanctions assuming that Iran meets, and continues to meet, its obligations. Indeed, Cirincione pointed out today out that western banks, fearful of running afoul of sanctions laws, have still not released the Iranian assets that were unfrozen under the terms of last November’s “Joint Plan of Action.” The challenge of getting a final deal through a potentially hostile US Congress, particularly in an election year, could also give Iran reason for concern.
Yet failed talks could be disastrous for both sides, according to the ICG. Failure now would make another attempt at negotiations very unlikely, would result in new punitive measures against Iran (including new sanctions on an already sputtering economy, and potential military strikes on Iranian nuclear sites), and could ultimately push Tehran to rush for a nuclear weapon, something which everyone, including Iran, says they don’t want.
]]>via IPS News
Even with potential U.S. strikes against Iranian ally Syria looming, Washington and Tehran appear to be preparing for the resumption of nuclear talks.
U.S. foreign policy analysts have been bustling since the Aug. 4 inauguration of Iran’s President Hassan Rouhani, who may have ushered in a new [...]]]>
via IPS News
Even with potential U.S. strikes against Iranian ally Syria looming, Washington and Tehran appear to be preparing for the resumption of nuclear talks.
U.S. foreign policy analysts have been bustling since the Aug. 4 inauguration of Iran’s President Hassan Rouhani, who may have ushered in a new era of Iranian diplomacy and international relations.
“As the architect of the sole nuclear agreement between Iran and the West – a not inconsiderable achievement given the depth of mistrust – Rouhani presents a real chance for making progress in nuclear talks,” Ali Vaez, an Iran expert at the International Crisis Group, told IPS.
“Under [Mahmoud] Ahmadinejad, although the two sides were sitting at the same table, one side played chess, the other checkers. Under Rouhani, they are more likely to play the same game, albeit according to different rules,” he said.
“To succeed, the two sides need to do what they never truly did during the past few years: bargain,” added Vaez.
Iran’s announcement on Thursday that its nuclear negotiating file would be moved from its Supreme National Security Council to its Foreign Ministry, which is headed by Mohammad Javad Zarif, has also received a cautious nod from the White House.
State Department spokeswoman Jen Psaki said on Thursday that the United States was aware of the reports.
“The inauguration of President Rouhani presents an opportunity for Iran to act quickly to resolve the international community’s deep concerns over Iran’s nuclear programme,” she added.
The implication that the Western-educated Zarif will be overseeing Iran’s nuclear dossier may boost an apparent growing conviction here that Rouhani, who appointed Zarif to the FM in August, is someone whom Washington can work with.
He made powerful acquaintances, including with then-senators Dianne Feinstein, Joe Biden and Chuck Hagel, during his tenure as Iran’s ambassador to the United Nations (2002-2007), although his contacts with U.S. diplomats date back all the way to the 1980s when he helped negotiate the release of U.S. hostages in Lebanon.
“Zarif…is one of the smartest, funniest people I’ve ever met in professional life…and I don’t think he believes it’s in Iran’s best interest to have a nuclear weapon personally,” said nuclear policy expert George Perkovich, at a Carnegie Endowment for International Peace briefing Thursday.
But Perkovich cautioned that Zarif is also a “formidable” negotiator who “unlike some of their predecessors” is neither “dumb” nor “ideological”.
“And so…we’re going to have to be sharp and on our game because if you’re trying to do stuff that’s just patently unfair and unbalanced, they’re just going to be able to slap us around the head rhetorically,” he added.
While no official date has been set, negotiations between Iran and the P5+1 group could resume as early as this month, though it remains to be seen how U.S. military action against Syria might affect them.
For Vaez, “A limited U.S. strike on Syria is more likely to delay than derail nuclear talks with Iran.”
He also told IPS that that Rouhani has put aiding Iran’s ailing economy and ending its isolation at the top of his agenda and will not let Syria “spoil” his plan.
“Losing both Syria and an opportunity for sanctions relief will constitute a double blow to Iran’s strategic interests and its new president’s agenda,” said Vaez.
While Rouhani has not personally, unlike hardliners in Iran, cast blame on Syria’s rebels for the alleged chemical attack, he has stated that the issue should be handled by the U.N. and warned against foreign military action.
“Iran, as it has stated before, considers any action against Syria not only harmful to the region but also to U.S. allies and believes that such a measure will not benefit anyone,” said Rouhani at the 14th Summit of the Assembly of Experts on Wednesday.
The careful line that Iran is walking on Syria, considered a long-time partner in Iran’s resistance bloc toward Israel, could result in an Iranian shift away from its ally as it pursues its greater interests.
“Syria has become Iran’s Vietnam, and [Bashar al-] Assad’s extensive use of chemical weapons, in equal parts amoral and stupid, had magnified Tehran’s quandary,” Mark Fitzpatrick, a non-proliferation expert at the International Institute for Strategic Studies (IISS), told IPS.
“With the leadership divided over how to respond, the hardliners are doubling down on their unqualified support for Assad, while Rouhani and other pragmatists are distancing themselves. Those divisions mean Iran will not respond militarily to a limited U.S.-led attack, though the flow of Iranian military arms may intensify, if enough Syrian airfields survive the tomahawk strikes,” he said.
“However difficult the mess Obama has on his hands over Syria, it’s nothing compared to the trouble Rouhani has been presented by his ‘ally’ in Damascus,” said Fitzpatrick.
Fitzpatrick added that while it’s not clear how such a move would play out, “Any real solution to the Syrian mess will have to involve the key outside players, including Iran.”
For now, Rouhani and Zarif at least appear to be holding true to what Rouhani said would be Iran’s policy of “constructive interaction with the world” during his first presidential press conference.
Rouhani’s eyebrow-raising Rosh Hashanah greeting on Twitter Wednesday was followed by a similar one by Zarif (his second official Tweet) who proceeded to tell U.S. House Minority Leader Nancy Pelosi’s daughter that she shouldn’t confuse his government with that of his predecessor.
“Iran never denied [the Holocaust],” Tweeted Zarif in response to a request by Christine Pelosi to “end Iran’s Holocaust denial”.
“The man who was perceived to be denying it is now gone. Happy New Year,” replied Zarif.
But the potential of additional sanctions on Iran pushed through by Congress during this critical time and the persistent negative effects of decades of mutual mistrust between Iran and the U.S. will temper hopes for a quick resolution to the nuclear issue regardless of what happens in Syria.
U.S. and Israeli fears that Iran could achieve the capability to dash toward a nuclear weapon by as early as 2014 according to worst-case assessments also increases urgency here.
To date, the U.S. intelligence community has assessed that Iran has not made the decision to pursue nuclear weapons.
“The issue then is not whether Iran will make decision in 2014 to dash for nuclear weapons. We don’t know whether they will or whether they want to and probably the probability is that they won’t, but they might,” Colin Kahl, the Pentagon’s top Middle East advisor during Obama’s first term, told IPS at the Carnegie briefing.
“The issue is more, from a U.S. perspective, that this becomes the last moment that the intelligence community can come to the president and say, boss, we’ll know when they move to nuclear weapons,” he said.
“If we lose the ability to detect [Iran’s dash toward a weapon], the ability to prevent nuclear weapons goes down dramatically and the military option then slips off the table… if I’m right…whatever your assessment is, and say that’s the amount of time we have for a diplomatic deal, that means you have 12-18 months. So let’s get on with it,” Kahl told IPS.
]]>via Iran Primer
The United States has imposed several layers of sanctions against Iran—for widely diverse reasons—dating back to the 1979 revolution. Tehran now wants relief from sanctions as part of any diplomatic deal on its controversial nuclear program. But lifting sanctions is often harder than imposing them—and [...]]]>
via Iran Primer
The United States has imposed several layers of sanctions against Iran—for widely diverse reasons—dating back to the 1979 revolution. Tehran now wants relief from sanctions as part of any diplomatic deal on its controversial nuclear program. But lifting sanctions is often harder than imposing them—and varies depending on the issues, origins and methods imposed.
What types of sanctions has the United States imposed on Iran?
Sanctions have been the policy tool of choice used by six presidents to deal with Iran. Since the 1979 revolution, the White House has issued 16 executive orders and Congress has passed nine acts imposing punitive sanctions on Iran in four waves.
The first wave of U.S. sanctions, from 1979 to 1995, was a response to the U.S. embassy hostage crisis and Tehran’s support for extremist groups in the region.
The second wave of sanctions, from 1995 to 2006, sought to weaken the Islamic Republic by targeting its oil and gas industry and denying it access to nuclear and missile technology. U.S. sanctions also targeted any company in a third country that invested in Iran’s energy sector, a move to compel allies to adopt a unified stance against Iran.
The third wave, from 2006 to 2010, was imposed chiefly due to concerns over Tehran’s nuclear ambitions, but also included punitive measures for Iran’s human rights violations. Sanctions targeted almost every major chokepoint in Iran’s economy.
The latest wave of sanctions since 2010 includes some of the toughest restrictions the United States has ever imposed on any country. They target Iran’s Central Bank and its ability to repatriate oil revenues as well as many transportation, insurance, manufacturing and financial sectors.
The first two waves of sanctions were unilaterally imposed by Washington. But the last two included similar measures imposed by U.S. allies and the United Nations, generating almost a global sanctions regime against Iran.
What would the United States need to do to lift sanctions?
The standard for lifting U.S. sanctions is high. The president could nullify the White House executive orders imposed over the years. But nearly 60 percent of these sanctions have also been codified into law by Congress, which puts amending or repealing sanctions beyond the president’s control. Congress would also have to take action.
For example, executive orders banning U.S. trade with Iran — under Executive Orders 12957, 12959 and 13059 — were subsequently written into the law when Congress passed the Iran Freedom Support Act in 2006 and the Comprehensive Iran Sanctions, Accountability, and Divestment Act in 2010. Similarly, sanctions on Iran’s energy and petrochemical sector under Executive Order 13590 and human rights violators under Executive Order 13606 were subsequently codified into law through the Iran Threat Reduction and Syria Human Rights Act of 2012.
The president could still exercise his waiver authority to exempt countries, entities and individuals from sanctions. He could also mandate greater flexibility in determining violations and enforcing penalties. The Clinton and Bush administrations opted for the latter option and never determined any country in violation of U.S. sanctions, which could have damaged relations with US allies.
What steps would Iran have to take to get sanctions lifted?
Sanctions have become so extensive and so intricately woven that the United States will probably have a hard time offering significant or tangible relief unless Iran reverses major aspects of its domestic and foreign policies. The same applies to the 34-year-old state of emergency on Iran, which gives the president broad powers to unilaterally impose sanctions or other punitive measures.
The 16 executive orders and nine Congressional acts are also not tied only to the nuclear issue. More than 80 percent of the sanctions are linked to Iran’s broader foreign or domestic policies. As such, not all have the same standards to be lifted.
On Terrorism: Restoration of U.S.-Iran trade relations would first require that the United States remove Iran from the list of state sponsors of terrorism, which Tehran has been on since the list was created in the 1980s. And the requirements are stiff. Tehran would notably have to cut ties to Hezbollah, a Lebanese Shiite militia and political party that Tehran helped create in the early 1980s, as well as several other movements that use violence.
Tehran would also have to provide assurances — and proof — that it had abandoned international terrorism and support for extremist groups. The White House would then have to certify to Congress that Iran had not provided support for terrorism for at least six months, timing that could delay implementation of any diplomatic deal. Congress could block Iran’s removal from the list through a joint resolution, which would in turn be subject to a presidential veto. Congress could override the veto with a two-thirds majority, however.
On Human Rights: Ending sanctions imposed for human rights violations under the Comprehensive Iran Sanctions, Accountability, and Divestment Act would require Iran to take several steps, including:
- unconditional release of all political prisoners;
- conducting a transparent investigation into the killings, arrests and abuse of protestors after the disputed 2009 presidential election;
- ending human rights violations;
- and establishing an independent judiciary.
On the Nuclear Program: The United States has no clear criteria for removing these sanctions. The basic demands by the world’s six major powers include:
- halting all enrichment of uranium up to 20 percent,
- neutralizing the current stockpile of uranium enrich to 20 percent
- mothballing the new enrichment facility build into the mountains of Fordo.
- accepting maximum level of transparency and intrusive inspections,
- resolving all the outstanding issues with the International Atomic Energy Agency,
- and abiding by the six UN Security Council resolutions demanding suspension of uranium enrichment and reprocessing activities.
But most US sanctions are multipurpose. For example, termination of measures under the Iran Sanctions Act , which is at the core of U.S. sanctions, requires:
- that the president to certify that Iran has ceased efforts to design, develop or acquire nuclear, chemical and biological weapons, as well as ballistic missile technology;
- that Tehran has been removed from the U.S. list of state sponsors of terrorism;
- and that Iran poses no significant threat to U.S. national security interests or its allies.
What obstacles would the White House face in lifting sanctions from Congress, political lobbies, public opinion or other players?
Lifting U.S. sanctions could be complicated by politics, particularly discordant views between the White House and Congress. Some lawmakers seem less interested in a diplomatic resolution–or less convinced of its feasibility. They are not swayed by the views of U.S. allies. Others would actually prefer to impose additional sanctions.
So in Washington’s highly politicized climate, Congress may not easily defer to the president on sanctions relief, especially given powerful lobbies on the issue.
Easing sanctions may also not automatically alter or increase international trade with Iran, given economic realities and business wariness. Sanctions have significantly altered basic trade and consumption patterns that may be hard to change—and may limit or delay any benefits to Iran. Some companies and countries that have shifted away from Iran over the years are unlikely to rush back without solid assurances that sanctions relief is not just temporary. Uncertainty would make them hesitant to re-engage.
For example, one possibility in a diplomatic deal would be short-term suspension of sanctions–as an interim step—so the two sides have time for building confidence between each other and for winning political support at home for concessions. One of Iran’s top priorities is to get sanctions relief so that it can export more oil, which accounts for up to 80 percent of its export earnings. But the international oil industry may hesitate to reengage during a short-term suspension. Iranian crude also has specific characteristics that would require reconfiguration of refineries, an expensive step without prospects of an enduring deal.
All in all, the nature of multi-purpose and multi-layered sanctions has confused their strategic purpose, while constraining Washington’s ability to respond to positive actions with requisite nimbleness. Over time, as they has simultaneously grown and ossified, the sanctions have become a less-than-optimal tool to advance negotiations in a diplomatic process where a scalpel, rather than a chainsaw, is required.
Would the United States remove the diverse sanctions in the same way?
The timing and means of removing sanctions will almost certainly vary.
- Politically sensitive sanctions–notably for Iran’s human rights violations and support of militant groups–are unlikely to be on the menu in the near future.
- Restrictions on oil and financial transactions are the crown jewels of the sanctions regime in the eyes of Western policy makers. Neither Washington nor its European Union partners are likely to suspend them without significant Iranian guarantees about Tehran’s nuclear concessions. But the reality of suspending sanctions is also not easy either. For instance, both the president and Congress would have to act to allowing Iran to reach its previous petroleum exports,including:
- revoking Executive Order 13622,
- using national security waiver to permit other states to buy more oil from Iran under the National Defense Authorization Act of 2012,
- permitting financial transactions with Iran’s energy, shipping and port sectors, which are all declared “entities of proliferation concern” under the Iran Freedom and Counter-proliferation Act of 2012,
- waiving sanctions under TRA and IFCA to allow the provision of insurance and reinsurance for shipping Iranian oil,
- and waiving the ban on repatriating Iran’s oil revenue under TRA. Waivers need to be renewed every 120 or 180 days.
Almost all Iranian major energy and shipping companies are also blacklisted by the Treasury Department, either as entities supporting terrorism (under Executive Order 13224) or for being involved in proliferation of Weapons of Mass Destruction under Executive Order 13382. Foreign companies will be more than reluctant to work with these companies unless they are delisted.
The only remaining option would be to suspend other sanctions that tangibly affect Iran’s economic well-being. The United States could allow Iran to import or export specific goods that produce revenue or help Iran’s manufacturing sector. The P5+1 world major powers — the United States, Britain, China, France, Germany and Russia — chose a similar route in the February and April 2013 negotiations with Iran in Almaty, Kazakhstan. Their offer to relax sanctions on Iran’s petrochemical sales and gold trade was meaningful, but it was not proportionate to the concessions expected from Tehran.
Given the complexities, another U.S. option might be to focus on European sanctions, which are more elastic and lack clear criteria for termination. Their repeal requires a unanimous decision by all 28 member states of the European Union. Building consensus, however, is not always a straight forward enterprise in Europe. Also, there is now so much overlap between the U.S. and EU sanctions that a unilateral EU removal of sanctions might have little impact on the ground. One-sided EU concessions also risk being seen by Tehran as a tactical ploy to maintain U.S. sanctions in place indefinitely.
Diplomatic talks are expected to resume in the fall. The challenge for world’s six major powers will be devising a package of incentives, including some degree of sanctions relief that is achievable both politically and legally while also genuinely addressing Iranian concerns. The challenge for the new Iranian government will be to respond in kind.
Ali Vaez is the International Crisis Group’s senior Iran analyst.
Click here to see Vaez discuss sanctions at a July 22 event at the Woodrow Wilson Center for International Scholars.
]]>A new report from Iran’s hawkish Ministry of Intelligence and Security (MOIS) suggests the Iranians may be more open to achieving a peaceful resolution to the dispute over their controversial nuclear program than ever before. ”With Obama’s reelection Tuesday, there is guarded hope in Tehran and Washington that a solution agreeable to [...]]]>
A new report from Iran’s hawkish Ministry of Intelligence and Security (MOIS) suggests the Iranians may be more open to achieving a peaceful resolution to the dispute over their controversial nuclear program than ever before. ”With Obama’s reelection Tuesday, there is guarded hope in Tehran and Washington that a solution agreeable to all parties in the nuclear standoff might finally be possible”, writes Jason Rezaian in the Washington Post:
The findings in the report suggest that the ministry has a pragmatic understanding of the challenges the country faces, the cost it is paying for continuing uranium enrichment at current levels, the threat of Israeli aggression and, perhaps most important, a way out of the stalemate.
Although the statement refers to Israel as the “Zionist regime,” it is otherwise devoid of the ideological tone that characterizes most ministry reports and that has been the Iranian norm for decades. Instead, the arguments in the 1,200-word report reflect many of the views agreed on by international advocates of a negotiated solution, namely that the potential destruction caused by strikes on Iran’s nuclear facilities would set back the program by only a few years at most and that diplomacy is a preferred way forward.
But according to Ali Vaez, a senior analyst at the International Crisis Group, the Post may be reading too much into the report. ”While Iran’s MOIS report provides a sober analysis of the current standoff, it doesn’t imply a different approach from the strategy Iran has been pursuing during the past decade. All one needs to do is to read the conclusion,” he said.
The conclusion reveals that Iran’s leaders do not fear an attack on their nuclear program because of their belief in the supremacy of Iran’s attack deterrent and self-defense capabilities. It says that war can be avoided through diplomacy or “military preparedness”.
Meanwhile, the Obama administration is reportedly likely to engage the Iranian government in direct negotiations in what would be a last-ditch diplomatic effort to head off a military strike on its nuclear facilities in the coming months.
But as Iran scholar Farideh Farhi points out, the key to moving the diplomatic process forward and avoiding a military conflict is flexibility on both sides:
]]>Unless Khamenei and company are given a way out of the mess they have taken Iran into (with some help from the US and company), chances are that we are heading into a war in the same way we headed to war in Iraq. A recent Foreign Affairs article by Ralf Ekeus, the former executive chairman of the UN special Commission on Iraq, and Malfrid-Braut hegghammer, is a good primer on how this could happen.
The reality is that the current sanctions regime does not constitute a stable situation. First, the instability (and instability is different from regime change as we are sadly learning in Syria) it might beget is a constant force for policy re-evaluation on all sides (other members of the P5+1 included). Second, maintaining sanctions require vigilance while egging on the sanctioned regime to become more risk-taking in trying to get around them. This is a formula for war and it will happen if a real effort at compromise is not made. Inflexibility will beget inflexibility.
As Iran faces economic unrest, discussion is intensifying over the impact sanctions are having on Iran’s economy.
But experts doubt that the current situation portends the end of the Iranian regime or Iranian capitulation to Israeli and Western-led demands that it change its nuclear stance.
“You have now a market [...]]]>
As Iran faces economic unrest, discussion is intensifying over the impact sanctions are having on Iran’s economy.
But experts doubt that the current situation portends the end of the Iranian regime or Iranian capitulation to Israeli and Western-led demands that it change its nuclear stance.
“You have now a market that is under a lot of tension” which has “created a big economic crisis for the government”, said Djavad Salehi-Isfahani, a professor of economics at Virginia Tech, during a meeting here Wednesday at the Wilson Center.
But Salehi-Isfahani added that there is a “lot of misunderstanding about the currency system in Iran”, noting that people are confusing it with huge devaluations that occurred in East Asian countries and Zimbabwe.
“Iran is nothing like that,” he said.
While expressing varying views about the severity of Iran’s economic problems, the Wilson Center’s panelists agreed that it’s still able to manage its ailing economy and the resulting unrest.
“Iran has a lot of experience with sanctions. In fact, what they did immediately is open up the books from the 1980s about how to deal with a currency crisis,” he said.
Demonstrators clashed with police outside Tehran’s central bazaar on Wednesday during protests about the Iranian currency’s declining value. The rial has lost an estimated 80 percent of its value against the U.S. dollar in the last year.
Ali Vaez, a senior Iran analyst at the International Crisis Group, told IPS that “the regime is likely to nip it in the bud to prevent (the protests) from snowballing.”
“Although it’s not clear if there will be more protests, one thing is certain: Iran will experience a much more securitised environment in the run-up to the 2013 presidential elections,” he said.
Iranians are also struggling with rising inflation and unemployment amid escalating U.S.-led sanctions linked to the Islamic Republic’s controversial nuclear programme.
Iran maintains that its nuclear programme is entirely peaceful but Western countries led by the U.S. claim that Iran is working towards achieving nuclear weapon-making capability.
Israel has been pushing the Barack Obama administration to move its previously stated “red line” on Iran, a nuclear weapon, to preventing Iran from obtaining nuclear weapons capability, something which Israel claims would seriously endanger its existence and the stability of the surrounding region.
“I’ve been speaking about the need to prevent Iran from developing nuclear weapons for over 15 years…I speak about it now because the hour is getting late, very late,” said Israeli Prime Minister Benjamin Netanyahu during his speech at the 67th annual U.N. General Assembly meeting last week.
Already under six rounds of sanctions imposed by the United Nations Security Council, Iran saw Western sanctions tighten markedly this year with an EU ban on Iranian crude oil purchases going into effect in July.
U.S. sanctions are also increasingly targeting banks that deal with Iran’s central bank, thereby seriously impeding Iran’s ability to conduct international transactions and trade.
Sanctions have not yielded tangible progress toward a diplomatic solution over Iran’s alleged nuclear ambitions, but the protests Wednesday and protests in July in the northeastern city of Nishapur over the rising price of chicken – a main food staple for the Iranian working class – indicate that segments of Iranian society will express their dissatisfaction when faced with serious pressure.
“The chicken prices got the government’s attention,” said Salehi-Isfahani, adding that the “government made a wise move in trying to stabilise the chicken market and not worry about the dollar.”
“The aim of sanctions is to raise pressure against the regime in order to solve the nuclear crisis in a peaceful manner,” Alireza Nader, a senior international policy analyst at the RAND Corporation, told IPS.
“But as we’ve seen, sanctions are also leading to major unrest in Iran and weakening the regime at home and abroad,” he said.
Bijan Khajehpour, an Iranian businessman and specialist on the Iranian economy, explained during the Wilson Center event that a number of factors have been harming Iran’s economy.
“It’s not just the sanctions…Iran’s economic developments have been undermined by sanctions, subsidy reforms, mismanagement and corruption,” he said.
“The degree of instability has reminded many citizens of the days of the Iraq-Iran war” and “public anger is reflecting itself in sporadic unrest, strikes, blogosphere protests and critical comments by artists,” he said.
But Khajehpour disagrees with reports suggesting that the Iranian economy is collapsing. “The current deterioration of the Iranian economy is less a period of economic collapse and more a period of economics adjustment,” he said.
“The citizens are suffering, but the macro economy could potentially benefit,” said Khajehpour, noting that sanctions which have impeded Iran’s ability to purchase the equipment it needs to develop key industries have forced it to produce them itself.
Khajepour added that, “The future story of Iran is in (its gas industry),” which is projected to grow over the next five years despite sanctions.
“The additional gas capacity will generate the potential of investments in gas-based industries with export potential,” said Khajehpour.
Suzanne Maloney, another panelist and Iran analyst at the Brookings Institute, said it’s “incredible and tragic” that “Iran’s economic horizons are more limited today than the last 50 years.
“There are huge constraints on Iran’s growth and development and that presents tremendous political vulnerabilities,” she said.
“Sanctions are working, but we’re not getting anywhere on the nuclear programme and that cannot be lost on anyone,” she said.
Michael Singh, the managing director of the Washington Institute, echoed the consensus among a number of well-known neoconservative analysts Wednesday by writing that more aggressive pressure and punitive measures are needed to change Iran’s nuclear calculus.
“Rather than hoping that giving current sanctions “time to work” will force Iran back to the negotiating table, the United States and our allies should add further pressure to the regime and the elites who comprise it, including through additional targeted economic sanctions, diplomatic isolation, bolstering the credibility of our military threat to the regime, and support for the Iranian opposition,” he wrote in an op-ed for Foreign Policy.
According to Trita Parsi, the president of the National Iranian American Council, more pressure alone will not bring about favourable results. “I don’t find it likely that the regime will capitulate due to the sanctions as long as sanctions relief is not part of the mix,” he said.
“The possibility that sanctions will lead to general regime change exists, but the question is what type of regime change would the devastation of the Iranian economy generate?” Parsi asked.
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