Iran Sanctions: War by Other Means

Iran Sanctions: War by Other Means
By Conn Hallinan – 13 July, 2012 – FPIP

Now that the talks with Iran on its nuclear program appear to be on the ropes, are we on the road to war? The Israelis threaten it almost weekly, and the Obama administration has reportedly drawn up an attack plan. But in a sense, we are already at war with Iran.

Carl von Clausewitz, the great theoretician of modern warfare, defined war as the continuation of politics by other means. In the case of Iran, international politics has become a de-facto state of war.

According to reports, the annual inflation rate in Iran is 22.2 percent, although many economists estimate it at double that. In the last week of June, the price of chicken rose 30 percent, grains were up 55.8 percent, fruits up 66.6 percent, and vegetables up 99.5 percent. Iran’s Central Bank estimates unemployment among the young is 22.5 percent, although the Financial Timessays “the official figures are vastly underestimated.” The production sector is working at half its capacity.

The value of the Iranian rial has fallen 40 percent since last year, and there is a wave of business closings and bankruptcies due to rising energy costs and imports made expensive by the sanctions.

Oil exports, Iran’s major source of income, have fallen 40 percent in 2012, according to the International Energy Agency, costing the country nearly $32 billion over the past year. The 27-member European Union (EU) ban on buying Iranian oil will further depress sales, and an EU withdrawal of shipping insurance will make it difficult for Tehran to ship oil and gas to its diminishing number of customers. Loss of insurance coverage could reduce Iran’s oil exports by 200,000 barrels a day, or $4.5 billion a month. Energy accounts for about 80 percent of Iran’s public revenues.

Whipsawed by energy sanctions, the worst may be yet to come. The United States has already made it difficult for countries to deal with Iran’s Central Bank, and the U.S. Congress is considering legislation that would declare the Iranian energy sector a “zone of proliferation concern,” which would strangle Tehran’s ability to collect payments for its oil exports. Other proposals would essentially make it impossible to do business with Iran’s other banks. Any country that dared to do so would find itself unable to conduct virtually any kind of international banking.

If the blizzard of legislation does pass, “This would be a significant ratcheting-up of the economic war against Iran,” Mark Dubowitz told the Financial Times. Dubowitz is executive director of the neoconservative Foundation for the Defense of Democracies, which has lobbied for a series of economic assaults against the Palestinians, China, and Hezbollah. …more