Bloomberg News reports on a new round of EU sanctions against Iranian banks and firms that will be announced tomorrow:

The new restrictions also include a ban on exports to Iran of materials that could be used in the Iranian nuclear and ballistic programs, in particular graphite, aluminum and steel as [...]]]> via Lobe Log

Bloomberg News reports on a new round of EU sanctions against Iranian banks and firms that will be announced tomorrow:

The new restrictions also include a ban on exports to Iran of materials that could be used in the Iranian nuclear and ballistic programs, in particular graphite, aluminum and steel as well as industrial software. In addition, the EU prohibited the import of natural gas from Iran and broadened the existing export ban on key equipment for the Iranian oil, gas and petrochemical industries.

…. The sanctions list will be extended to include 34 entities that provide “substantial financial support to the Iranian government” and one person involved in the country’s nuclear program, according to the EU statement. The companies are active notably in the oil and gas industry and in the financial sector, the EU said.

The National Iranian Tanker Co., the largest oil-vessel operator in Iran, is hiding some of the ownership of tankers it controls right under the nose of the U.S. in Central American tax havens, concealing their real nationality from flag registries.

…. On Monday, the EU will formally sign off a ban on the provision of flags to Iranian tankers and cargoes by nationals and companies in the bloc even when operating elsewhere, an EU diplomat said.

In last night’s vice presidential debate moderated by ABC News’s Martha Raddatz, Vice President Joe Biden and GOP nominee Paul Ryan (R-WI) focused extensively on the Iranian nuclear program and the US-Israeli response to it. Ryan sought to portray Obama Administration’s public disagreements with Israeli Prime Minister Benjamin Netanyahu as [...]]]> via Lobe Log

In last night’s vice presidential debate moderated by ABC News’s Martha Raddatz, Vice President Joe Biden and GOP nominee Paul Ryan (R-WI) focused extensively on the Iranian nuclear program and the US-Israeli response to it. Ryan sought to portray Obama Administration’s public disagreements with Israeli Prime Minister Benjamin Netanyahu as sending “mixed messages” to Tehran that would only encourage Iran to develop nuclear weapons, while Biden moved to attack the Congressman’s lack of foreign policy experience.

Ryan started off by reiterating the new Romney campaign red line: no nuclear weapons capability, a position endorsed by Congress and the Government of Israel:

RYAN: We cannot allow Iran to gain a nuclear weapons capability. Now, let’s take a look at where we’ve gone — come from. When Barack Obama was elected, they had enough fissile material — nuclear material to make one bomb. Now they have enough for five. They’re racing toward a nuclear weapon. They’re four years closer toward a nuclear weapons capability.

Ryan asserted that it has been the Republican Party, and not the White House, that has been the primary driver on the sanctions:

RYAN: Mitt Romney proposed these sanctions in 2007. In Congress, I’ve been fighting for these sanctions since 2009. The administration was blocking us every step of the way. Only because we had strong bipartisan support for these tough sanctions were we able to overrule their objections and put them in spite of the administration.

Imagine what would have happened if we had these sanctions in place earlier. You think Iran’s not brazen? Look at what they’re doing. They’re stepping up their terrorist attacks. They tried a terrorist attack in the United States last year when they tried to blow up the Saudi ambassador at a restaurant in Washington, D.C.

And talk about credibility? When this administration says that all options are on the table, they send out senior administration officials that send all these mixed signals.

The Vice President countered that the Republicans have been pushing too hard on sanctions that the rest of the world would refuse to support them:

BIDEN: It’s incredible. Look, imagine had we let the Republican Congress work out the sanctions. You think there’s any possibility the entire world would have joined us, Russia and China, all of our allies? These are the most crippling sanctions in the history of sanctions, period. Period.

When Governor Romney’s asked about it, he said, “We gotta keep these sanctions.” When he said, “Well, you’re talking about doing more,” what are you — you’re going to go to war? Is that what you want to do?

Biden also rounded on Ryan for the Romney campaign’s repeated suggestions that Obama is not serious about preventing Iran from acquiring a nuclear weapon should it choose to do so:

RYAN: We want to prevent war.

BIDEN: And the interesting thing is, how are they going to prevent war? How are they going to prevent war if they say there’s nothing more that we — that they say we should do than what we’ve already done, number one.

BIDEN: When my friend talks about fissile material, they have to take this highly enriched uranium, get it from 20 percent up, then they have to be able to have something to put it in. There is no weapon that the Iranians have at this point. Both the Israelis and we know — we’ll know if they start the process of building a weapon.

So all this bluster I keep hearing, all this loose talk, what are they talking about? Are you talking about, to be more credible — what more can the president do, stand before the United Nations, tell the whole world, directly communicate to the ayatollah, we will not let them acquire a nuclear weapon, period, unless he’s talking about going to war.

The two then clashed over Ryan’s (unsubstantiated) assertion that Iran is now “four years closer to a nuclear weapon”:

BIDEN: … they are not four years closer to a nuclear weapon.

RYAN: Of course they are.

BIDEN: They’re — they’re closer to being able to get enough fissile material to put in a weapon if they had a weapon.

RADDATZ: You [Biden] are acting a little bit like they [the Iranians] don’t want one.

BIDEN: Oh, I didn’t say — no, I’m not saying that. But facts matter, Martha. You’re a foreign policy expert. Facts matter. All this loose talk about them, “All they have to do is get to enrich uranium in a certain amount and they have a weapon,” not true. Not true.

They are more — and if we ever have to take action, unlike when we took office, we will have the world behind us, and that matters. That matters.

RADDATZ: What about [former Secretary of Defense] Bob Gates’ statement? Let me read that again, “could prove catastrophic, haunting us for generations.”

BIDEN: He is right. It could prove catastrophic, if we didn’t do it with precision.

In a wide-ranging interview, MSNBC’s Andrea Mitchell discussed Mitt Romney’s foreign policy speech with neoconservative Romney-adviser Dan Senor, challenging him over his intimation that the Obama administration lacked the will to increase sanctions on Iran two years ago:

SENOR: They talk about all these tough sanctions that they [...]]]> via Lobe Log

In a wide-ranging interview, MSNBC’s Andrea Mitchell discussed Mitt Romney’s foreign policy speech with neoconservative Romney-adviser Dan Senor, challenging him over his intimation that the Obama administration lacked the will to increase sanctions on Iran two years ago:

SENOR: They talk about all these tough sanctions that they put in place. The question is, why did they wait until 2011 and 2012 to put those sanctions in place in Iran? When Congress was pushing for tough sanctions on Iran in 2009 and 2010 –

MITCHELL: Dan, on that — on that, you know very well that –

SENOR: — the administration was fighting them every step of the way.

MITCHELL: Sir, you know very well –

SENOR: I’m sorry?

MITCHELL: That those were the unilateral — you know those were the unilateral sanctions on the central bank and the reason given by the [T]reasury officials, right or wrong; was that to do that level of sanctions would create an energy crisis at that time because there wasn`t enough other oil –

SENOR: So why — no, Andrea, come on.

MITCHELL: Let me finish the question.

SENOR: Andrea.

MITCHELL: Because I was reporting this in real time.

SENOR: OK. Fair enough.

MITCHELL: What about the multilateral sanctions that this administration achieved with the help of finally getting Russia and China on board from the United Nations which the Bush administration was never able to achieve because there was no understanding or no agreement from the U.N. that diplomacy was being given some time to work.

SENOR: It’s great that we got multilateral sanctions through the U.N. Security Council. Unfortunately the price we paid for getting those sanctions, for getting China and Russia to buy into those sanctions was that the central bank sanctions would not be included. Everyone agrees across the political divide in the United States who follow this issue closely that the central bank sanctions are the ones that have had the real bite.

The administration resisted efforts in Congress repeatedly to get those sanctions in place. Now you can cite, as they often do, the economic implications. It’s not clear to me why there were economic implications in 2009-2010 but there weren’t in 2011-2012, but they also said that it would undermine their diplomatic strategy. Their diplomatic strategy was reaching out to the ayatollahs in Iran with an outstretched hand, unconditional — unconditionally trying to get unconditional talks.

They were silent when there was a genuine protest movement in Iran that would have given political pressure on the regime. All these moments where those economic pressure or political pressure in 2009 and 2010 the administration did nothing because they believed there was this direct deal that they could get done with the — with the regime. It failed. It did not happen.

So it is important that today we have some sanctions in place that are having an impact. We’re simply saying imagine if those sanctions and the kind of political pressure that could be waged had been put in place earlier on, and to say that things are going fine just because the Iranian economy is in bad shape is just a sad statement of the state of affairs.

The goal is not to weaken the Iranian economy. The goal is to stop Iran’s nuclear program. Weakening its economy and weakening the regime politically are means.

MITCHELL: Dan –

SENOR: They are not results. There`s only one measurement that matters. And whether or not Iran is closer to the nuclear weapons program and today they are.

Presently, Senator Mark Kirk (R-IL), whose policies are closely associated with the neoconservative Foundation for the Defense of Democracies, is in fact now seeking a “broader ban [Congressional] for Iran central bank deals and “to blacklist entire energy sector of Iran,” Reuters reports.

The International Civil Society Action Network (ICAN) has published a useful brief aptly subtitled “Killing them softly” about the impact of sanctions on the lives of ordinary people who live in Iran, particularly women and other vulnerable groups such as Afghan refugee women and children. I recommend [...]]]> via Lobe Log

The International Civil Society Action Network (ICAN) has published a useful brief aptly subtitled “Killing them softly” about the impact of sanctions on the lives of ordinary people who live in Iran, particularly women and other vulnerable groups such as Afghan refugee women and children. I recommend it to everyone who thinks that sanctions can be potential instruments for positive change in Iran.

To be sure, most individuals and organizations that push for “crippling” sanctions do so in the name of Israeli security and/or non-proliferation with little or no regard for the resulting impact on the Iranian population and civil society. In a world where economic warfare is considered diplomacy, more sanctions will apparently be the name of the game “until Iran begins to negotiate seriously” or “chooses a different path” — whatever that means. Pretensions or hope regarding the utility of blunt and wide-ranging sanctions for changing the way the hardline leadership in Iran treats its population, or, even better, for bringing about a change of regime in a “peaceful” way, are also out there.

The ICAN brief, while using the words of activists in Iran, does a good job of explaining how draconian sanctions imposed by the United States and the European Union ultimately harm Iranians who are caught in the middle of a battle that has very little do with their dreams of living decent lives and impacting their government’s policies through civil activism.

This is not to suggest that the Iranian government has escaped the impact of sanctions unscathed. The leadership is held responsible for the mishandling of an economy which, by all accounts, is faced with both stagnation and hyperinflation. And, if we take at face value the words of parliamentary speaker Ali Larijani, 20 percent of Iran’s current problems can be attributed to sanctions that have limited Iran’s access to the foreign exchange needed for the import of strategic goods from abroad due to the reduction of oil exports and Iran’s inability to acquire exchangeable currency for the exported products. Larijani attributed the remainder of the problems, mostly related to rampant inflation, to the poor implementation of a subsidy reform plan that did not give enough attention to production in both industry and agriculture.

The right or wrong belief that better economic management can help Iran overcome the impact of sanctions perhaps explains why internationally imposed draconian pressure has not led to a change in the leadership’s calculations regarding the nuclear program. In fact, according to Iran’s Leader Ali Khamenei, Western governments

…openly say that it is necessary to force the Iranian government officials to revise their calculations by intensifying pressures and sanctions, but looking at the existing realities causes us not only to avoid revising our calculations, but it also causes us to continue the path of the Iranian nation with more confidence.

In other words, instead of a recalculation on the part of the Iranian government, the Iranian population is going to have to get used to a “resistance economy”. What does that entail? Mr. Khamenei’s answer:

Putting the people in charge of our economy by implementing the general policies specified in Article 44 of the Constitution, empowering the private sector, decreasing the country’s dependence on oil, managing consumption, making the best of the available time, resources and facilities, moving forward on the basis of well-prepared plans and avoiding abrupt changes in the regulations and policies are among the pillars of an economy of resistance.

Considering how these objectives have been in the books since at least 2006 when privatization, empowerment of the private sector and efficiency became official policy — and produced little in the way of concrete results — it’s not clear what an administration that is working through its last year can achieve beyond perhaps “managing consumption.”

A few steps have already been taken towards that goal. This week, several economy-related ministers as well as the head of the Central Bank of Iran (CBI) met with members of parliament in a closed session. Parliamentary meetings are by law open and publicly broadcasted. Article 69 of the Constitution only allows for closed sessions under “emergency conditions, if it is required for national security”. This closed meeting and Khamenei’s words clearly suggest an understanding of the emergency situation that Iran is facing.

The first decision that resulted from this meeting was the CBI’s elimination of what is called “travel currency”. Until now, Iranians could get $1,000 a year at the lower government exchange rate of 12,260 Rials per dollar for their trips abroad (the lower $400 per year for pilgrimage travel to Iraq and Saudi Arabia was maintained). According to the head of the Majles’ Economy Commission, Arsalan Fathipour, the $10 billion worth of travel currency that leaves the country every year has no economic justification and has been halted. Travelers now have to rely on an unofficial, but not illegal, floating market rate that has hovered between 19,000 and 20,000 Rials per dollar during the past couple of months.

The lower official exchange rate will remain for the import of basic and strategic goods from abroad in order to limit spiraling inflation. But everything else will probably be imported at the higher rate. As pointed out by Virginia Tech economist Djavad Salehi Isfahani, this multiple exchange rate system, despite inefficiencies, makes some sense when a country is being denied access to global markets, provided action is also taken to:

…minimize misallocation and corruption, for example by publishing a complete list of all official foreign exchange sold to private importers along with the list of the items they import.  The alternative, which is to sell all currencies at the rate set in the parallel market, is to give too much influence to sanctions and to sentiments that underly capital flight.

Whether these steps will also be taken is yet to be seen. Another announcement after the close of the Majles meeting was that some sort of command center comprised of representatives from of all branches of government has in effect been created for the resolution of economic problems and will soon gain implementation powers through legislation. According to Donyaye Eqtesad, the country’s most influential economic daily, the push by some influential MPs is for this command center to have “special powers so that in the coming year it can take the necessary steps for the implementation of the strategy of resistance economy.”

To my mind, this also means that there is not much confidence among the Iranian political class in the Ahmadinejad Administration’s ability to steer the country in a positive direction during the last year of its tenure. This political class holds President Ahmadinejad responsible for his incompetent handling of the country, but due to the urgency of the escalating sanctions regime, no longer considers challenging him and his ministers a useful way of expending their energy. Talk of “working together” and “unity” has permeated the language of the conservative and hardline politicians who are currently running Iran. This language is not meant to extend to the reformist and even centrist politicians and technocrats who have been essentially purged since the 2009 presidential election, but does indicate a closing of ranks among an even narrower circle of politicians in the face of adversity and in the name of resistance.

If ICAN’s analysis is accurate, it also foretells harsher economic realities for the most vulnerable elements of Iran’s population, a harsher political environment for those agitating for change, and a more hostile setting for those who have tried to maintain historical links between Western societies and Iranian society.

Sanctions impact calculations, but usually not in the intended fashion.