In Case You Missed It: UANI Profiled in Major German Publication
WirtschaftsWoche: "The Group, which is Campaigning Against Iran's Nuclear Weapons Programme, is Focusing on Entirely on Economic Pressure, to Discourage the Regime in Tehran from its Nuclear Plans."
Scarcity as a weapon
The sanctions are proving to be effective: Declining oil exports and rising inflation, which threaten the stability of the regime, may offer an opportunity for a change of heart in Tehran's foreign policy.
By Hans-Jakob Ginsburg
WirtschaftsWoche [English Translation]
January 21, 2013
Mark Wallace is an optimist, even if he does not sound like one at first: "We are at war", says the lawyer from Florida, who is a former US ambassador to the United Nations during the George W. Bush administration. Today he runs the New York lobby group "United Against Nuclear Iran "(UANI). The group, which is campaigning against Iran's nuclear weapons programme, is focusing entirely on economic pressure, to discourage the regime in Tehran from its nuclear plans. "This is a war we are winning" says Wallace, "because the sanctions are taking effect and will force Iran to its knees." Wallace now has expanded its advocacy to Europe and has come to Berlin.
In fact, the proponents of tough sanctions against Tehran can no longer complain about Germany. Under continuous pressure from Washington, German banks have suspended their business in Iran, and the Iranian market, favoured by German exporters for decades, has become a taboo. For a good six months, an export ban on all goods which could be used for military purposes ("Dual use") applies to all EU Member States. This also includes goods which can be used in the oil, gas and petrochemical industry in Iran. In addition, the harshest of all sanctions are now having an effect: Following the US example, EU members states have also banned their banks and money houses from virtually all banking transactions with Iran. Iranian buyers therefore have great difficulty, paying for imports. According to estimates by UANI, total imports of the Iranian economy fell in 2012 (converted into dollars) by approximately 50 percent. German exports to Iran, which in 2011 already declined by 19 percent to 3.1 billion euros compared to the previous year, are likely to drop almost half of that sum in 2012. In Iran this has led to huge inflation. The purchasing power of the national currency, the Rial, went into free-fall in mid-2012, observed Hans-Jakob Schindler from the London based Institute for Strategic Dialogue, who worked for German companies in Tehran for many years and now advises the New York sanction lobby. A year ago, one dollar cost 11,000 rials on the open market, now it is almost three times as much.
According to Mr Schindler, of all blockade measures, one rather unremarkable one was the most effective: the US and now also the EU prohibit transactions of insurance companies, which insure ships transporting oil from Iranian ports. Indeed, Iran's Asian customers, from India to China to Japan and South Korea do not participate in the Western sanctions for political and economic reasons. However, the problem with insurance coverage makes imports from Iran so uncertain and so expensive that they are increasingly looking for other suppliers. According to calculations by OPEC and the energy agency IEA, exports declined from 2.1 million barrels per day a year ago to currently 1.3 million barrels a day.
EXPORT IN DECLINE
In early January Oil Minister Rostam Ghassemi informed the parliament in Tehran that due to sanctions, oil export revenues feel by 45 percent in nine months. This is about 40 billion dollars annually and represents more than eight percent of the gross domestic product. According to Ghassemi, the decline will continue in the first quarter of 2013. This is nothing less than the announcement of an approaching economic collapse. The Iranian state budget derives two thirds of its revenue from the nationalized oil and gas industry. This is why, in autumn 2012, President Mahmoud Ahmadinejad decided on deep budget cuts. On paper, many budgets were reduced by one quarter or discontinued altogether. What happened since then in Iranian financial politics is unknown to outsiders. Conceivably, the politically heavily damaged Ahmadinejad may simply be printing money.
THE AYATOLLAH TAKES THE DECISIONS
However all of this does not answer the question of what political effects the sanctions are having politically. President Ahmadinejad, whom many in the West perceive as the great villain of the regime in Tehran due to his anti-Semitic and anti-American hate speeches, was never the political number one of the Islamic dictatorship and is now Prime Minister on recall and the scapegoat for the country's economic ills. The strong man is still the stiff religious and supreme leader Ali Khamenei: and he announced in December that his country would never and under no circumstances forego the building of a nuclear industry.
But what about the nuclear armament that the regime never confessed to? Possible compromises, which would allow Iranians the use of civilian nuclear power on a large scale, while denying all military uses of it, have been present on the negotiating table for at least a year. It is possible that the envoys of Khamenei and Ahmadinejad may just be playing for time to then present the world with its nuclear bomb and the corresponding missile system. It may also be possible that the Iranian leadership is now seeking a lucrative way to abandon its nuclear programme. When Ahmadinejad's tenure ends this summer, his successor - probably a conservative after revolutionary leader Khamenei's liking - would like to see his rise to office linked to a turnaround of the economic outlook. However this is only possible if sanctions are loosened and relations to the rest of the world are relaxed. It is probable that Khamenei has already picked the successor: among the religiously ultra-conservative, economically far removed from Ahmadinejad's populist social policy, officials of the regime. Oil Minister Ghassemi is among this group as is Ali Akbar Salehi, who this week spoke very positively about the prospect of future cooperation with US defence minister Chuck Hagel.
From a US perspective, Ghassemi's and Salehi's new colours appear to be an obvious sign that the sanctions policy has begun to take effect. It is possible that the halfway rationally thinking exponents of the Tehran regime are planning a change of policy, as otherwise not only the country is in danger of facing impoverishment but also the stability of the regime itself is threatened. Until now the regime was able to rely on the uneducated, but very pious, poor people in the big cities for support - this became clear during the unsuccessful uprising of the middle class after Ahmadinejad's counterfeit re-election four years ago. However this foundation may be eroded if the regime could no longer offer its supporters jobs or welfare benefits, which had been expanded under Ahmadinejad's tenure.
And this development looks likely at the moment. The Iranians can no longer afford a range of imports. As a response, the government has forbidden the export of many strategic goods - including small machinery and raw materials outside the oil sector - which has aggravated the difficulties of many companies in the country. Unemployment is approaching 25 percent, and is especially affecting young people in the poorer quarters of large cities.
The election of the President will be influenced by "growing economic hardships and the resolution of the nuclear issue, which is necessary for change ", wrote Kevan Harris, Iran expert of Princeton University.
The sanction advocates do not want to wait that long. Ex-ambassador Wallace has a new idea: The export of spare parts for ship repair to Iran should be prohibited. As Iranian oil tanker have not been modernised for decades, the Iranian merchant fleet would collapse without spare parts within a few months, and oil exports would discontinue: This, at the latest, would be the victory in the economic war.
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