Impact of Iran Sanctions Widens

The New York Times on April 4, 2012 released the following:

“By RICK GLADSTONE

The Iran sanctions effort led by the United States appeared to be causing new fractures in the Iranian economy on Tuesday, with leading oil companies in South Africa and Greece suspending imports of Iran’s crude oil, further signs of emergency self-reliance emerging in Iran, and an influential former Iranian president publicly challenging his country’s anti-American stoicism.

The latest signs of economic distress came as new questions arose about the date and location for resumed talks between Iran and the so-called P5-plus 1 countries — the five permanent members of the Security Council plus Germany — over Iran’s uranium enrichment activities. Iran contends the activities are peaceful but its adversaries suspect they are a cover to develop the capability to make nuclear weapons.

The talks, suspended more than a year ago, are supposed to resume in less than two weeks, but a host country has not been finalized, and Iranian news reports have suggested that the April 13 date may be changed.

On Wednesday, the Iraqi foreign minister, Hoshyar Zebari, told Reuters that a visiting Iranian delegation had suggested Baghdad as a venue, despite earlier indications from senior Iranian officials that they favored Istanbul — the venue of the last, failed talks on the nuclear issue in January 2011.

“The proposal came from them,” Mr. Zebari said, referring to the Iranians.

Mr. Zebari said he would discuss the idea with the ambassadors of the countries involved — the United States, Russia, China, France and Britain in addition to Germany — and would hand over a letter to them. Any further delay in resuming talks would almost certainly lead to Western charges that Tehran is playing for time while its scientists press ahead with uranium enrichment.

While Istanbul once seemed a middle ground between Iran and the outside powers, relations between Turkey and Iran have cooled because of Ankara’s alignment with nations pressing Syria — Iran’s closest regional ally — to end its bloody crackdown on dissent and open a political transition.

The maneuvers in advance of the proposed talks have been accompanied by a tightening array of sanctions aimed at stopping Tehran’s uranium enrichment. But Iran had called the measures a bullying tactic by the West that is doomed to fail. At the same time, Iranian leaders have acknowledged that the sanctions are causing deprivations in the country by severely restricting international financial transactions and sales of crude oil, Iran’s main export. The European Union will tighten the sanctions further starting July 1 with an embargo of Iranian crude oil.

In South Africa, Engen Petroleum, which has been South Africa’s biggest buyer of Iranian oil and is a leading marketer and refiner of petroleum products throughout southern Africa, said Tuesday it was no longer Iran’s customer. “Engen has suspended imports from Iran and our contingency sources are in play,” a company spokeswoman, Tania Landsberg, said in an email, confirming press reports of Engen’s decision.

South Africa, which historically has relied on Iran for a quarter of its imports, had been sending mixed messages regarding Western pressure to reduce Iranian purchases, with recent data suggesting that the country has been buying more crude oil from Iran this year. Engen’s decision to buy elsewhere suggested that the Western pressure was working.

In Greece, Hellenic Petroleum, the country’s leading refiner, also suspended purchases of Iranian crude oil — not because of the impending European Union embargo, but because banking payments to Iran have been rendered unworkable by the financial sanctions already in place, Reuters reported.

Those financial sanctions, including the recent expulsion of Iran’s central bank from a global financial communications network, have reverberated through Iran’s economy, most notably contributing to a sharp drop in the value of Iran’s currency, the rial, against the dollar. The pressure on the currency, which has caused the price of imported goods to soar in Iran, was an underlying theme in a New Year’s message by Ayatollah Ali Khamenei, the supreme leader, strongly urging Iranians to buy only goods made in Iran.

In what appeared to be a step toward enforcing the ayatollah’s exhortation, Iranian trade authorities have now banned 600 imported items. The ban, reported by Sharq, a reformist Iranian newspaper, did not specify the items but quoted Hamid Safdel, director of Iran’s Trade Promotion Organization, as saying Iranian manufacturers also make those items, rendering the imports unnecessary.

While Iranian leaders have presented a unified front of hostility to the sanctions, a disagreement surfaced on Tuesday, when Akbar Hashemi Rafsanjani, a former president who is now the chairman of the Expediency Council, an advisory panel to the supreme leader, suggested that Iran had erred by failing to befriend Saudi Arabia, the Middle East’s leading oil producer.

The Saudis, who are overwhelmingly Sunni Muslims and harbor wariness toward the Shiite majority in Iran, have pledged to increase their exports to compensate for any supply shortfall caused by the Iranian oil embargo. Saudi cooperation is crucial to the West’s strategy.

“If we had good relations with Saudi Arabia, would the West have been able to impose sanctions?” Mr. Rafsanjani said in the quarterly International Studies Journal, as translated by Agence France-Presse.

Mr. Rafsanjani, whose stature as a pragmatic force in Iranian politics diminished in recent years but now seems to be reviving, also reiterated his longstanding suggestion that Iran restore diplomatic relations with the United States, estranged since the 1979 revolution. His view is directly at odds with that of Ayatollah Khamenei, who appears to see any conciliatory gesture as a sign of weakness.

“”The meaning of negotiation is not that we submit to them,” Mr. Rafsanjani wrote in what seemed a rejoinder to the ayatollah. “We negotiate, and if they accept our positions or we accept theirs, then it is done.””

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Douglas McNabb – McNabb Associates, P.C.’s
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