Several news sources have reported that the new measures taken by the Obama Administration are an effort to cut the ruling mullahs off from the global capital markets with sanctions aimed at the rogue nation’s central bank and oil industries and the steps rely on the anti-terrorism USA Patriot Act for legal justification.
In sum, any institution or company that conducts business with Iran through its bank system are considered to be abetting Iran’s illicit activities including but not limited to its pursuit of nuclear weapons and support for terrorism by way of providing weapons to Hamas in the Gaza strip and Hezbollah in Lebanon.
Target of US/Iran Sanctions
According to the Washington Post, the sanctions targets are companies that provide goods or services to Iran’s oil and gas industries. That being said, most international oil companies have already been forced out of Iran by pre-existing laws. Further, the administration has designated Iran’s financial sector a so-called money laundering operation which some observers have called an “unusual measure” that is intended to cut off Iranian banks from the capital markets and one that is being coordinated with Canada, Great Britain and France.
The new measures were announced by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner. “The message is clear: If Iran’s intransigence continues, it will face increasing pressure and isolation,” Clinton said.
However, China, Japan and other countries process transactions though Iran’s central bank since these nations are the main importers of Iran’s oil; but that oil is not the same grade as the light sweet crude that is used by the US. This is one reason why America does not buy oil from Iran. Of course, the US has not had diplomatic relations with the rogue state since the fall of the Shah in 1979. However, the sanctions will affect the global markets as Iranian oil accounts for about 4 million barrels per day.
Will U.S. Sanctions on Iran be Effective?
But the effectiveness of the sanctions remains to be since China and Japan will not abide by an order imposed by the US and its allies to cease dealings with the central bank and this might put the Obama Administration in a tough spot since the administration cannot sever its ties with Chinese or Japanese banks.
In the final analysis, some diplomats remain uncertain if the sanctions will be effective as Iran draws closer to building a nuclear war head and has already demonstrated the capacity to deliver missiles that can easily be targeted at Israel and Western Europe. Moreover, Israel has remained steadfast it its opposition to Iran obtaining a nuclear capability deeming such a move to be an existential threat – one which Israel may confront unilaterally.
Sources:
Joby Warrick, U.S., Allies Hit Iran with New Sanctions, The Washington Post, Nov 21, 2011
Kyle Colona - Kyle Colona is a freelance writer from the New York area with an extensive background in legal and regulatory affairs.
