The following was re-published on the Voices from Russia blog, where I saw it. It was written for Voice of Russia World Service, by Ilya Kharlamov (6/29):
The West is stepping up its efforts to
tighten a grip on Iran in connection with its nuclear programme. The
USA slapped sanctions on foreign state-run banks that clinched oil
deals with Tehran and imposed restrictions on the operations of
private financial institutions cooperating with the Islamic Republic.
On 1 July, the EU’s launching an oil embargo against Iran. Such an
abundance of “economic reprisals” against a major player on the
world oil market could have lasting consequences. No more new oil
from Iran will be available in Europe after 1 July. Countries will
have to rely on the Iranian oil that they purchased under previous
contracts. The EU has even banned crisis-struck Greece from importing
Iranian oil on preferential terms. Washington’s restrictions on the
banks that were “spotted” in partnership with Tehran pursue the
same agenda… to slash Iranian oil sales.
The restrictions in question have
already had a negative effect on the social and economic situation in
Iran, which has seen a rise in food prices and a devaluation of the
national currency. However, the embargo on Iranian oil led to an
increase in oil prices throughout the EU this spring, to the
disappointment of millions of European consumers. Oil prices might
spike again after 1 July. The EU accounts for 20 percent of Iranian
oil exports, this amounts to about 30 million tons (195 million bbl).
Europe expects Saudi Arabia to fill the gap. Nevertheless, Iran has
the resources to block the Strait of Hormuz, through which oil from
Saudi Arabia and LNG from Qatar reaches world markets.
Yevgeni Satanovsky, of the Institute of
the Middle East, said, “As for Iran, it could offset its losses by
supplying oil to other countries. This means that the embargo might
not prove as effective as planned. Some countries, including South
Africa, have sharply increased Iranian oil imports. Consumption of
Iranian oil hasn’t dropped in Turkey. South Korea cut Iranian oil
supplies, but only slightly. Indian companies reduced the consumption
of Iranian oil in the country’s state sector, but it’s increased
in the private sector. China, even though it cut Iranian oil
supplies, has exerted pressure on Iran to get it to slash oil prices
so that Beijing could boost the consumption of Iranian oil for the
same prices”.
Because of the embargo, Iran will lose
20 percent of the 100 billion USD (3.25 trillion Roubles. 79 billion
Euros. 64 billion UK Pounds) it earns from oil exports annually. The
loss is far from disastrous. In addition, sanctions will help to spur
Iran’s efforts in other areas. Vitaly Bushuyev, General Director of
the Institute of Energy Strategy, observed, “The role of Iran in
the formation of world oil prices has been exaggerated. No radical
fluctuations on the oil market have been predicted for the near
future. Oil prices will range between 85 and 110 USD (2,760-3,570
Roubles. 67-87 Euros. 54-70 UK Pounds). Iran may affect that, but its
influence won’t go further than causing one-time price volatility
within a maximum variation of 3-5 dollars (97-162 Roubles. 2.50-4
Euros. 2-3.25 UK Pounds)”.
In other words, the western sanctions
against Iran won’t trigger any upheavals on the world market or an
economic collapse in Iran. Instead, they could hit the wallets of
ordinary people in Europe. US Secretary of State Hillary Clinton said
that unless Iran takes specific steps to dispel the international
community’s concerns regarding its nuclear programme, pressure on
it will increase, and it’ll become more and more isolated. As an
alternative to economic pressure, Washington might carry out air
strikes against Iran’s military facilities. In this respect,
attempts to exert pressure on Tehran through economic sanctions
aren’t the worst option.
