Do sanctions on Iran work?

December 16, 2008
Do sanctions on Iran work? It all depends how one defines "work," I suppose.
Posted by Warren Strobel
McClatchy blog

The goal of United Nations and U.S. sanctions is to persuade Iran to give up its suspected drive for a nuclear weapon, and halt what the State Department says is its support for terrorist groups such as Lebanon-based Hezbollah. On that score, clearly the sanctions haven't achieved their intended goal. And after just spending two weeks in Iran, it's unclear to me that Iran will ever give up the nuclear option--or, at least that it will do so as a response to pressure.

It's harder to measure whether the sanctions have achieved their more immediate target: cutting off Iran's access to sophisticated military and nuclear technology, and to the U.S.-dominated international financial system. My guess is that the answer here is a qualified yes--that is, the sanctions have raised Iran's cost of doing business in these areas considerably.

How about Iran's oil and gas industry, the country's prime income earner? Iran is badly in need of foreign investment and technology--$120 billion worth, by one estimate I read--and keeping international energy firms out of Iran is a prime goal of U.S. government policy. Is it working?

To find out, I spent 2 1/2 hours in Tehran last week with Hojatollah Ghanimi Fard, from the National Iranian Oil Company.

Fard--you can see his photo here--manages to be both friendly and fiesty at the same time. He holds the title of Vice President for Investment Affairs. From the U.S. perspective, he might as well be Vice President for Getting Around the Sanctions.

We discussed, and debated, oil, sanctions, U.S. policy toward Iran, the 1980-81 seizure of the U.S. Embassy in Tehran and a lot else besides.

Fard vigorously made the case that the sanctions, at least as applied to gas and oil, have hurt the United States and other Western powers more than they've hurt Iran. (U.S. firms are barred from doing business in Iran's energy sector; some European countries, such as France, have urged their companies not to make new investments).

The result, Fard said, is that Iran has looked elsewhere for investment (elsewhere apparently being places like China, Malaysia, and other Asian countries). He described the sanctions as being "like a roadblock. .... At first you get angry" when you come upon it as you're driving, but then you find a different route. "It's not as quick as the other but, ah, look at the scenery."

"If the sanctions mean depriving a country of (ultimately) receiving some technology ... I have to say to you there is no sanction of that sort," he said.

Fard asserted that Iran has signed "billions" of dollars worth of oil and energy development contracts with foriegn firms in the past four months. While Iran isn't naming its foreign partners yet, Fard insisted: "This is not bluffing."

Iran is holding off on announcing the contracts based on past experience, when agreements-in-principle were announced, and then scuttled by pressure from Western governments. Such was the fate of a deal estimated at $1 billion between Iran and Conoco, that was scuttled by President Bill Clinton in 1995.

While much of what Fard says might be accurate, one can't help but feel the sanctions must be having some impact if Iran is afraid to announce its successes. And the fact remains that oil- and gas-rich Iran actually imports refined petroleum, because it doesn't have enough refining capacity to meet its domestic requirements.