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unilateral us financial sanctions begin to tell on tehran

By streiff Posted in War — Comments (2) / Email this page » / Leave a comment »

While we noted below the flaccid regime of sanctions imposed by the UN Security Council on Iran because of Iran’s diplomatic equivalent of flipping the UNSC off while mooning it, it appears that the United States acting on its own has begun to inflict pain on Tehran. From the Washington Post (with a h/t to Captain’s Quarters):

More than 40 major international banks and financial institutions have either cut off or cut back business with the Iranian government or private sector as a result of a quiet campaign launched by the Treasury and State departments last September, according to Treasury and State officials.

The financial squeeze has seriously crimped Tehran's ability to finance petroleum industry projects and to pay for imports. It has also limited Iran's use of the international financial system to help fund allies and extremist militias in the Middle East, say U.S. officials and economists who track Iran.

The U.S. campaign, developed by Treasury Secretary Henry M. Paulson Jr. and Secretary of State Condoleezza Rice, emerged in part over U.S. frustration with the small incremental steps the U.N. Security Council was willing to take to contain the Islamic republic's nuclear program and support for extremism, U.S. officials say.

Read on.

I have argued for some months that we have been inflating the danger that Iran poses all out of proportion to reality. The Quds Brigade has been portrayed as supermen instead of the moderately competent organization it is that now has nearly 400 of its operatives in our custody. It’s population is declining, it’s women are becoming an export, and its oil production is on the skids. Iran is at a point in the history of the current regime where it must win and win decisively against us in Iraq or it will rapidly slide into irrelevance.

The campaign differs from formal international sanctions -- and has proved able to win wider backing -- because it targets Iran's behavior rather than seeking to change its government. "This is not an exercise of power," Levey said in the interview. "People go along with you if it's conduct-based rather than a political gesture."

Iranian importers are particularly feeling the pinch, with many having to pay for commodities in advance when a year ago they could rely on a revolving line of credit, said Patrick Clawson, a former World Bank official now at the Washington Institute for Near East Policy. The scope of Iran's vulnerability has been a surprise to U.S. officials, he added.

In this effort one of our major allies has been Ahmadinejad himself. While morality and idealism might not be commodities in great supply among international bankers, they do like stability and the idea that they will get their money back.

Ahmadinejad's rhetoric -- from denying the Holocaust to comparing Iran's stock exchange to gambling -- has helped, experts say. "There is very little foreign investment in Iran not because of sanctions, but because of the atmosphere created by Ahmadinejad's crazy statements," said Jahangir Amuzegar, former Iranian finance minister and executive director of the International Monetary Fund.

Iran, as demonstrated in taking 15 British marines and sailors hostage over the weekend, is being forced into an increasing series of double-down ventures. Its actions will become more outrageous and absent a change of regime or a tremendous modification of behavior in Tehran we will be in a shooting war with Iran in the near future.