Sanctions on Iran

By Owen Wirth

At the end of last year, late December, the US and the European Union announced widespread sanctions on Iran as a result of its questionable nuclear program. These are not the first sanctions laid upon Iranian institutions in recent years however, and also not the first time world governments have feared a nuclear Iran. Iran has been on America's watch list since the Cold War as a political interest and now an interest for its role in global terrorism. The sanctions imposed have been mostly directed at Iran's Central Bank and focused on its oil market. However, since the 70's there have been various sanctions against the different institutions in Islamic Iran to try and reduce the possibility of their attaining a nuclear missile. In 1987 President Reagan issued an Executive Order that limited all Iranian imports to pertaining strictly to news material or petroleum products refined from Iranian crude oil in a third country. This was followed by President Clinton's executive orders in 1995 and 1997 that prohibited all individuals from trading or investing with Iran. These steps were seen to be directly stunting the growth of Iran's nuclear development program, but now in recent months sanctions have been taken to cripple the national economy of Iran in an effort to stop their nuclear proliferation by any means necessary. 

Of the three entities actively sanctioning Iranian business (The U.S., The U.N. and the European Union) the United States has the broadest range of general restrictions prohibiting business with any national institutions and even disallowing business with foreign investors in anything Iran. The European Union has sanctions against more organizations than the U.S., but all are involving organizations that contribute to the Iranian nuclear program. Meanwhile the U.N. has the least sanctions because countries on the Security Council (China and Russia) are able to veto measures that impede their trade alliance with Iran. The most crippling of these sanctions are those pertaining to its crude oil industry. Because so many countries have limited imports from it, Iran is now seeking to enhance its exchange of oil with Pakistan and also to construct a gas pipeline across the border of the two countries. Both countries are having troubling economic times so it is possible that the move could backfire and cost both countries millions of dollars. The move to Pakistan simply emphasizes the effects these sanctions are having on the long term goals of Iran. The sanctions limit the output of oil on the international market, but government officials say that there are enough reserves to deal with the embargo effectively, with countries like Saudi Arabia pledging to increase the amount of oil exported. 

Iran is the fourth ranking country in amount of oil produced per day, with half the amount produced by the US, but over 200,000 more barrels a day than China. The cumulative sanctions have reduced the value of the currency in Iran by half, and have greatly reduced capital goods available in Iran. The idea is now that the U.S. wants to wait to see if the sanctions will be enough to stop the development of a militarized nuclear program, but countries like Israel are trying to force the hand of the U.S. to use military action to bring Iranian development to a halt before it is too late.