The tactics behind sanctions on Iran

03 September, 2014 | Posted By: Oren Laurent

By Oren Laurent
President, Banc De Binary

After three decades of U.S. sanctions on Iran, you could be forgiven for thinking that the new bout of sanctions is hardly news worthy. Yet the latest list of 25 targeted firms and individuals is important; it is as much an attempt to halt Iran’s nuclear programme as a powerful and symbolic warning at a time when global powers are working towards an agreement.
Iran’s President Hassan Rouhani was critical of the American decision. He told Iranian TV that he remained committed to the international negotiations but that the imposition of further sanctions was a “very ugly move” and “in conflict with the spirit of the talks.” Rouhani has a point. Adding sanctions does seem to break the implicit trust behind the very concept of negotiation. Yet, Iran is no innocent player. It is still developing a nuclear programme, and America, more than ever, needs to act tough.
Here’s the backdrop. An interim deal was reached last year in Geneva that relieved certain sanctions in exchange for limits to Iran’s atomic activities. Talks then began in February between Iran and the U.S., China, France, Germany, Russia and Britain, with the goal of reaching a long-term agreement under which Iran would end its nuclear programme in return for the full lifting of sanctions. Diplomats failed to reach such an agreement by the agreed July 20, and extended the deadline until November 24.
In the weeks since the deadline was extended, the Sunni Islamist group, ISIS, has raged throughout Iraq and Syria, brutally murdering those who oppose them and threatening to expand their Caliphate into Jordan and Saudi Arabia. The Shia Muslims in Iran, along with the United States and Europe, have common motive to impede ISIS’ advances. It raised the question: is the enemy of your enemy your friend?
Washington announced the new sanctions on Friday, with officials saying that they target those supporting terrorism, assisting the nuclear programme, or involved in evading previous sanctions. The message is clear: despite Iranian assistance to Kurdish forces battling ISIS, America will not tread lightly and appease the Persian Gulf regime. One shared enemy doesn’t constitute a friendship.
In the current turbulence of the Middle East, America is surely more troubled than ever by the prospect of a nuclear Iran. The White House will also be very conscious that at the same time as ISIS’ terror activities, Iranian-backed Hamas, classified as a terror organisation by the U.S. and EU, was firing rockets into Israel, America’s closest ally in the region.
Arguably, the economic pain of sanctions so far has served a purpose, with some analysts crediting this as the very reason Iran came to the negotiating table. Iran’s most valuable export, oil, has fallen from 2.4 mln barrels per day in 2011 to nearer 1 mln, and inflation is at record highs. Since talks began, an increasing number of Western and Asia companies have expressed interest in doing business in Iran, tempting the Ayatollahs with still forbidden fruit.
Thus, the latest sanctions may serve as a reminder of what the Iranian regime stands to lose. In the world of power and force that currently dominate Middle Eastern politics, America, who has made it clear that a military attack against Iran would be a last resort, has to play the strongest hand it has left. Washington’s intentions are not to undermine the talks as much as to justify their purpose, and convey to Iran that the delayed deadline must be met. It’s a warning against complacency: merely sitting at the negotiating table will not suffice.