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Israel Briefing Book
Fact Sheet: The Failure of Sanctions Against Iran
Overview
More than three years have passed since Iranian Foreign
Ministry spokesman Hassan Qashqavi's December
2008 statement that
“Iran will never suspend uranium enrichment.” His prediction now seems mostly accurate and analysts
predict that the Iranians could produce a nuclear bomb in anywhere from six months
to five years.
“We haven't really moved
one inch toward addressing the issues,” Mohamed
ElBaradei, then director-general of the International
Atomic Energy Agency told the Los
Angeles Times in 2010. In a 2012 interview with the Financial Times of Germany, Yukiya Amano, new director general of the IAEA, announced that "what we know [about Iran's nuclear program] suggests the development of nuclear weapons."
The entire world seems to
agree that Iran should
not be allowed to develop nuclear weapons. Since the military option to deter Iran is a scenario that few want, or believe can work,
the principal tactic that has been adopted
to prevent Iran from creating a bomb
is sanctions. Sanctions, imposed either unilaterally or multilaterally, are a peaceful and diplomatic avenue to make hardships for the regime - both economically and politically - to put them in a situation where a choice must be made between continuing the nuclear program or watching their country suffer. These sanctions have been internationally accepted since the adoption of the UN’s Security
Council Resolution 1737.
The United States and European Union have been the biggest supporters of sanctions against the Iranian regime and have been passing bills to impose sanctions for a number of years. Unfortunately, it seems these moves have done little to deter Iran. Former CIA director Leo Panetta said that while new sanctions carry the possibilty to create serious economic problems and help weaken the government in Tehran , they would most likely do little to deter Iran’s “ambitions with regards to nuclear capability.”
While the efficacy of the sanctions themselves have been questioned, there is no question as to their failure if they are not implemented correctly and unwaveringly supported. The United States, though, has had issues fully implementing sanctions against Iran. The Congress and White House have passed a number of sanctions bills - in June 2010 and most recently in November 2011 - but the efficacy of these bills have been severely weakened since considerable waivers were attached to them, allowing the U.S. to delay their implementation. For example, President Obama's Executive Order 13590 from November 2011, imposing sanctions on Iran's central bank, has been delayed more than six months as fear of rising oil prices has kept the President from implementing the order. To date, no U.S. Administration has fully implemented the previous sanctions on Iran in place since 1996.
Likewise, European Union sanctions have fallen mostly on deaf ears for many reasons, including its inability to completely restrain all European nations from dealing with Iran and its need for foreign oil imports, a major Iranian resource. The rise in crude oil prices has allowed Iran the maneuverability to get around sanctions, as higher profit from sales to other countries lessens the financial impact of sanctions.
Also minimizing the impact of sanctions are UN member nations that supported Resolution
1737 in 2006 but continue to trade with Iran, proving to Iranian leaders that UN resolutions
and international threats need
not be taken seriously. Russia, China and India, for example, have enabled the Iranians to get past any negative consequences that sanctions may apply. In fact, Russia and China both vigorously oppose sanctioning the regime. In 2012, Russia’s Foreign Ministry said that sanctions are "deeply mistaken policy" and would be unlikely for Iran to "make any concessions or any corrections to its policies” because of sanctions.
Developments
Here are just a few examples
of how the effort to isolate Iran has
been undercut:
2012
- In January 2012, the Stockholm International Peace Research Institute (SIPRI) published a study confirming that the Islamic Republic of Iran Shipping Line (IRISL) has renamed nearly a quarter of its shipping fleet (90 out 123 vessels) in order to evade international sanctions. Additionally, the company has reflagged many of its ships so that shippers and maritime security agencies do not know they are moving Iranian vessels. Additionally, SIPRI noted that Iranian weapons smugglers are using respectable shipping companies out of Europe to move illegal weapons into Iran; though this was mostly done without the consent or knowledge of the companies.
- In January 2012, India, the world's fourth-largest oil consumer, said it would not take steps to cut oil and petroleum imports from Iran despite the US and European sanctions. "It is not possible for India to take any decision to reduce the imports from Iran drastically, because among the countries which can provide the requirement of the emerging economies, Iran is an important country amongst them," Indian Finance Minister Pranab Mukherjee said.
2011
- In November 2011, the EU was shown to account for nearly 20% of all Iranian oil purchases in the first half of 2011, which helped to nullify the effects of any sanctions imposed against the Islamic regime. Italy, Spain and France were the leading purchasers of Iranian oil in 2011.
-
In August 2011, Iran received 1 billion euros ($ 1.4 billion) from India for overdue oil debts. Indian refiners expect Iran to resume 400,000 barrels a day of oil exports in September 2011, since India began paying its debt that Iran Deputy Oil Minister Ahmad Qalebani said amounted to $4.8 billion.
- A January 2011 examination of German government trade statistics revealed that German export trade to Iran increased from $4,159,920,000 between January and October 2009 to $4,175,687,000 during the same time period in 2010. Iranian imports to Germany climbed to $909,176 between January and October 2010 when compared to $574,261 during the identical time frame in 2009.
- At the start of 2011, Iran was the second largest OPEC exporter, after Saudi Arabia, and during
January - November 2010 generated revenues of $64 billion, an $11 billion increase
over the full-year 2009 figure. Iran has also been chosen by OPEC members for the cartel's 2011 presidency.
- Swiss energy
giant EGL signed a 25-year deal with the National Iranian Gas Export
Company to buy 5.5 billion
cubic meters of Iranian natural gas per
year, starting in 2011, for approximately
$20 billion.
2010
-
A July 2010 AFP report revealed China has invested an estimated $40 billion in Iran's oil and gas sector. According to Iran's Deputy Oil Minister, “The volume [of Chinese investment] in upstream projects is 29 billion dollars.” He also added that China signed contracts worth an additional $10 billion in petrochemicals, refineries and oil and gas pipeline projects.
-
In January 2010, a top Russian arms trade official said Russia still considered Iran a valuable customer for its weapons and that no international agreements bar Russia from selling weapons to Tehran. In June 2010, despite the passing of UN Security Council Resolution 1929, Russia still said sanctions do not forbid the delivery of S-300 air-defense missiles to Iran.
- As of January 2010, there were around 1,000 Italian companies active in Iran, including Fiat, Ansaldo, Eni, Danieli, Duferco, and Maire Tecnimont, which signed a €200 million (~$287 million) gas deal with Iran. Other Italian companies, such as Carlo Gavazzi Space, have even equipped the regime's military and contributed to Iran's satellite program.
- From 2000-2010, the U.S. Treasury Department granted nearly 10,000 special licenses to American companies so they could sell products in Iran and other countries the U.S. considers sponsors of terrorism. Most of the licenses were granted under a law allowing trade in humanitarian goods, though they included products as diverse as cigarettes and chewing gum.
2009
- Chinese state companies
began supplying petrol to Iran
in September 2009 and now provide up to one-third
of its imports.
- On September 11, 2009, Russian Foreign
Minister Sergei Lavrov made clear that
Moscow would not be involved in any new
rounds of sanctions against Iran in the
UN Security Council and dismissed a U.S.
timetable for securing progress from
Iran on ending its nuclear-fuel program.
- On September 6, 2009, Venezuelan President
Hugo Chavez sealed an agreement to export
20,000 barrels per day of gasoline to
Iran.
- Between 2000 and 2009, the U.S. government awarded over $107 billion in contract payments, grants and other benefits to foreign and multinational American companies engaged in business with Iran.
- German petrochemical
company Basell Polyolefine signed a €825
million trade deal with Iran on June
8, 2009 to supply technology to build
three plants involving synthetic and
plastic material.
- On June 3, 2009, Iran signed a $4.7 billion
contract with the Chinese National Petroleum
Company to develop part of South Pars,
the world's largest reservoir of gas that
is shared by Iran and Qatar.
- Between January and July 2009, trade between the 27 European Union countries and Iran amounted to some €10 billion (about $14 billion).
2008
- On December 2, 2008, Malaysia signed
a $14 billion deal with Iran for the
construction of two natural gas liquification
plants as well as two gas fields. The
two countries signed
a multi-billion dollar gas deal
in 2007.
- Iranian
students study abroad in Germany, France, Canada, Australia and
the United
Kingdom. The Association of American
Universities is seeking to pave the way
for a bilateral education program with
Iran.
University presidents from Carnegie
Mellon, Rice, Maryland and Cornell,
Florida and UC Davis visited Tehran
in November 2008 with the blessing
of the U.S. State Department to discuss
student exchange programs.
- Russia's trade
relationship with Iran directly
ignores the Security Council Resolution.
In August 2008, the Russian oil corporation,
Gazprom, signed a multi-billion dollar
deal to help Iran cultivate its oil and
gas fields. French and Japanese oil companies
were candidates at one point, but dropped
out of dealings with Iran because of
international pressure. Russia has
also been building a nuclear plant
in Iran, which is now expected to begin
operating in 2009.
- On November 27, 2008, German and
Iranian business leaders began a conference
in Hamburg called “Iran Sanctions:
Practical Consequence for German Firms.” The
purpose of the conference was to improve
German business relations in Iran as
well as the German and Iranian political
relationship.
-
In August, 2008, a German corporation signed a $150 million
deal with Iran to build natural gas liquification
plants in the country. The German Economics
Ministry maintains that the trading of
natural gas to Iran does not violate Security
Council Resolution 1737.
-
Germany's Federal Statistical
Office released data showing exports
to Iran increased 10 percent over the
first three quarters of 2008. Germany's
exports to Iran are expected to total
4 million euros this year, close to the
record it set in 2004 and 2005. During
the first seven months of 2008, the German
government approved 1,926 transactions
with Iran, a 63 percent increase over
last year. This has further cemented
Germany's position as Iran's largest
trade partner.
- Even the United States has engaged in
trade with Iran. According to the Department
of Agriculture, Iran has bought more than
one million tons of wheat from the United
States since the beginning of the 2008-9
crop season.
- In January 2008, Iran
and Italy’s electric
company, Edison International, signed
an oil exploration deal for $107 million.
2000 - 2007
- In April 2007, Austrian oil company OMV signed a 22 billion euro agreement to produce liquefied natural gas from Iran's South Pars gas field.
- Turkey has
maintained trade ties with Iran.
In 2005, bilateral trade between
Iran and Turkey equaled $4 billion,
a figure expected to grow to $10 billion
in 2008. Iran and Turkey have agreed
to continue their relationship and hope
to increase their bilateral trade revenue
to $20 billion per year.
- China has
also increased its volume of trade with Iran.
Between 2000 and 2005, the amount of
Chinese imports into Iran increased by
360%. Iran’s Deputy Minister
of Commerce, Mehdi Ghazanfari, predicts
that exchanges between Iran and China
for the year 2008 will total $25 billion.
China also negotiated a $16 billion deal
to develop Iran’s northern Pars
gas field.
In addition:
- Iran retains strong
relations with Pakistan and
is working on a “peace pipe” that
would transfer natural gas between Iran, Pakistan and India.
- Oman and Bahrain have
been negotiating with Iran to buy natural
gas.
- Smugglers in Oman have taken advantage of their close proximity to Iran and have been able to ship needed cargo and goods to Iran, helping the Islamic regime obtain goods that have been sanctioned for sale from the west.
- The Persian Gulf
Cooperation Council decided
to consider a Free Trade Agreement with
Iran. The agreement will lead to economic
benefits for the UAE, Saudi
Arabia, Qatar and Kuwait.
- Austria's third-largest bank, Raiffeisen Zentralbank, remains active in Iran and has absorbed the transactions of other major European banks that shut down their operations in Iran.
- German engineering firm Aerzen secured a 21 million euro contract to supply a steel factory in Esfaham, Iran.
- Treasure Capital Bank, based in Minsk, Belarus, is the subsidiary of Bank Tejerat in Iran, sanctioned by the United States in January 2012.
All of the aforementioned nations maintain
that they are not violating Security
Council Resolution 1737. Trading with Iran
and importing goods from the country cannot,
the countries claim, contribute to Iran's threat
of creating a nuclear bomb. Any investment
in Iran, however, bolsters its economy and
provides revenues that can directly or indirectly
(by freeing up other resources) be used for
nuclear weapons development.
Iran might not be discouraged from its goal
of producing nuclear weapons by total compliance
of all nations with existing sanctions, or
even stricter sanctions, but it is evident
that the present weak, unenforceable and
widely ignored policy has not had the desired
effect.
Sources:
- AFP (August 25, 2008); (September
8, 2009);
- European
Jewish Congress
- Der Spiegel (January 24, 2012)
- Fars
News Agency
- Financial Times (September
23, 2009)
-
Gulf
in the Media (January 22, 2011), (August 9, 2011);
- Jerusalem Post (June
11, 2009), (January 28, 2010), (June 10, 2010), (July 31, 2010), (January 9, 2011); (January 30, 2012)
- The Jewish Journal (July 26, 2010)
- Los
Angeles Times, (December
6, 2008)
- NewsBriefsOman
- New York Times (March 6, 2010), (December 23, 2010);
- Reuters (November 27, 2008); (December
9, 2008); (November 24, 2011);
- The
U.S. State Department
- Wikipedia
- The Wall Street Journal (February
6, 2009); (September
11, 2009); (January 14, 2010); (January 23, 2012);
- The Washington Times (June 27, 2010)
-
Washington Institute for Near East Policy (January 7, 2011)
-
Washington Post (January 24, 2012)
- Ynet (January 28, 2010)
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