Jerusalem Center for Public Affairs reports that Brig. Gen. Hossein Dehghan, slated to be Iran’s new defense minister, was responsible for building Hezbollah and was behind the suicide bombing at the U.S. Marine barracks in Beirut that killed 241 Marines.
By Mark Wallace
The recent demonstrations and protests in Iran over the increasingly perilous state of its economy are the latest and most powerful sign that the economic war is having a tangible impact. There is no doubt that punitive financial and economic sanctions have contributed greatly to the collapse of Iran’s currency, the rial. Iran now suffers from hyperinflation and the rial has fallen by 80 percent in the past year. As history has shown, durable hyperinflation such as this can result in public unrest and, occasinally, regime change.
The conventional wisdom of the past was that sanctions against Iran would have little impact because of Iran’s vast oil wealth. That was, in retrospect, flawed thinking. In the past year, Iran’s acceleration of its nuclear program and defiance of the IAEA, its sponsorship of terrorism and its destabilizing behavior in countries like Syria finally prompted the international community to act. The loss of Iranian oil has had little effect on the market so far, as countries like Saudi Arabia, Iraq and Libya have made up for the loss.
The sanctions now in place are beginning to have a dramatic impact, as Iran’s currency is collapsing. As a result of hyperinflation, we have seen Iran’s currency exchange market become paralyzed. Licensed exchange bureaus refused in recent days to do business at the officially imposed rate of 28,500 rials to the dollar, while black market dealers were offering the dollar at a rate of 35,500 rials, sparking protests and a violent crackdown. Significantly, the ire of the protesters was primarily directed at the regime for its mismanagement, and for actions that led to sanctions in the first place.
If history is any guide, the leaders of Iran have reason to worry, as there is a correlation between hyperinflation and regime change. In Indonesia, hyperinflation and the collapse of the rupiah from 2,700 to the dollar to nearly 16,000 over the course of a year was one of the principal sources of discontent, which brought people out to the streets to overthrow the Suharto regime. In the case of Yugoslavia, hyperinflation was the motivating force that led Slobodan Milosevic to start a war to divert attention from the monetary crisis facing the country — a war that led to his ultimate defeat.
Regardless of the precipitating event, hyperinflation can signal the death knell of a regime. We often forget that a “Persian Spring” preceded the Arab Spring, and that Iran has not only restive minorities, but a restive middle class frustrated with a corrupt theocratic regime, culminating in protests over the 2009 election. If the regime faces increased and durable hyperinflation, Iran’s demographics suggest that the mullahs’ brutal hold on power could face serious challenges.
At this critical stage, it is time for U.S. and EU policymakers to do all they can to build upon and ensure the durability of Iran’s hyperinflation. The best way to do so is by implementing a total economic blockade that would pit the vast purchasing power of the world’s two largest economies against that of Iran. Such an economic blockade would bar any business, firm or entity that does work in Iran from receiving U.S. and EU government contracts, accessing U.S. and EU capital markets, entering into commercial partnerships in the U.S. and EU or otherwise doing business in the U.S. and EU. The result would be an immense economic barrier to entry into Iran’s marketplace, and would place unprecedented pressure on the rial.
Other steps to pressure the rial could be taken as well. As the rial devalues, Iranians seek the safe haven of dollars and gold in the currency markets of Afghanistan and Iraq and the gold markets in Turkey. Stemming the ease of accessibility to dollars and gold would further pressure the rial. Other creative ideas include impeding the flow of sophisticated currency printing technology and other products that have been previously provided to Iran’s central bank by European vendors. In fact, recently the German currency printer Koenig & Bauer AG announced the cessation of its provision of bank note printing equipment and services in Iran under pressure from United Against Nuclear Iran, seriously impeding Iran’s ability to manipulate its money supply and maintain the integrity of the rial.
It is time to present the mullahs in Iran with a clear choice — they can forego a nuclear weapon or they can have a functioning economy. To be sure, there is no guarantee that even a total economic blockade will prevent Iran from changing its strategic calculus to develop a nuclear weapons capability. But as the prospects of war over the next months increase, does the international community not owe it to itself to say it has exhausted all other options? It surely makes sense to try, particularly since we have seen the impact current sanctions are having on the regime. And the human cost of hyperinflation, though at times great, is far less than those of a nuclear-armed Iran or a preemptive military conflict.
On the same day the Obama administration has exempted South Korean and Indian compliance with sanctions on Iran, the Iranian press is reporting that U.S. trade with Iran tripled between March and April 2012:
The latest figures and statistics of the Census Bureau said that despite the U.S-sponsored sanctions against Iran, the United States exported $43.8 million worth of goods to Iran in April. In March, the U.S. had exported. $13.9 million worth of exports to the Islamic Republic. The figure is the highest value of U.S. exports to Iran in the last 36 months. The figure also shows a 200 percent increase compared with April 2011.
If the Obama administration seeks to convince the world that solidarity on coercive measures are necessary to bring Iran productively to the table and that the White House is serious about denying Iran a nuclear weapons arsenal, this is not the way to do it.
(Reuters) – Saudi Oil Minister Ali al-Naimi said on Wednesday oil markets would remain well supplied even after fresh international sanctions against Irantake effect, as global crude oversupply is already as much as 1.5 million barrels per day (bpd).
U.S. and European Union sanctions on Iran‘s oil exports take effect in June and July, and are aimed at stemming the flow of petrodollars to Tehran to force it to halt a nuclear program the West suspects is intended to produce weapons.
Iran exports about 2.2 million bpd, mostly to Asia, in a global market of around 89 million bpd.
When asked if he saw oil supplies tightening in coming months as global sanctions against Iran come into effect, Naimi said: “Absolutely not”.
“There is today about 1.3 to 1.5 million barrels per day (bpd) of extra supply over demand,” he told reporters in Tokyo after holding talks with Japanese officials about energy supplies. Japan is a major buyer of Iranian crude.
The Organisation of Petroleum Exporting Countries (OPEC) pumped about 1.3 million barrels per day above its output target in March, according to the group’s monthly report in April.
Saudi Arabia, OPEC’s biggest producer and the world’s top crude oil exporter, is pumping around 10 million barrels per day (bpd) and is storing 80 million barrels to meet any sudden disruption in supplies, Naimi said on Tuesday.
Worries of a supply disruption from the Middle East due to escalating tensions between the West and Iran pushed benchmark Brent crude prices over $128 in March, a gain of over 20 percent from the start of the year.
Prices have since eased but have stayed well above $100, keeping global fuel costs high and threatening to derail the fragile global economic recovery.
Naimi said it was up to developed nations to decide whether to release oil from their strategic reserves. “That’s their decision,” he said.
(JPost) Switzerland, a pivotal banking giant and one under whose aegis much international trade is transacted, is crucial in imposing meaningful sanctions on Iran. Swiss dillydallying can do proportionally greater harm than equivocation on part of other states the same size.
Unfortunately, the Swiss have long failed to put their money where their mouth often is. They persist in doing the wrong thing – or in not doing the right thing – despite much sanctimony.
Last week, we were informed that while Switzerland has purportedly extended financial sanctions against Tehran, it stopped short of freezing the assets of the ayatollahs’ central bank and of imposing an oil embargo in line with actions taken by other Western powers in view of Iran’s ongoing nuclear project.
The Swiss Federal Council did freeze the assets of eight Iranian firms and three Iranian individuals but it did not extend its sanctions to the Iranian central bank, because, in the words of the Swiss Economics Ministry, that bank “is important for the Iranian economy.”
But that is precisely the logic of sanctions – to hit Tehran where it hurts, not to lightly rap it on the wrist. The word from Bern is that it would reconsider at a “later date” whether to ramp up its sanctions.
That is bad news, because Switzerland is not one of Iran’s dubious autocratic hangers-on such as Venezuela or Syria, and it is not a Russian or Chinese ally. Hedging on sanctions by seemingly enlightened Western governments underscores why these sanctions – imposed by both the EU and US – have always looked better on paper than in the real here-and-now.
Their major flaw – hardly the only one – is the probability that not everyone will adhere to them.
We aren’t talking about blatant, provocative defiance, as in the cases of Iran’s circle of best friends, nor of countries less ideologically confrontational but with various economic and geopolitical axes to grind (such as Russia along with a host of former USSR components, China and other East Asian states).
European democracies – like Switzerland – should for their own good be in the vanguard of the struggle to defend Free World interests against a rogue regime with nuclear ambitions. Currently this struggle is limited to doubtfully adequate measures, making it all the more imperative that Western democracies do their utmost to meticulously abide – at the very least – by these feeble strictures. Otherwise, they are a lost cause and little more than a cover-up for scandalous inaction.
Switzerland imports Iranian oil indirectly, but Swiss energy giant Elektrizitätsgesellschaft Laufenburg had proceeded with a projected pipeline to transport the fuel via Turkey. Previously it signed a mega-deal to import more than 5 billion cubic meters annually of Iranian gas valued at 18 billion euros.
This wasn’t the private vagary of an insubordinate firm. It was sponsored with fanfare by the Swiss government itself. Then-foreign minister Micheline Calmy-Rey mounted a pilgrimage to Iran to “witness” the 2008 signing of that momentous gas-supply contract. Sporting a sheer white head scarf, she accorded the transaction her government’s stamp of approval and lent the occasion high profile, prestige and legitimacy.
An unrepentant Calmy-Rey intoned that that “Switzerland is an independent country which has its own strategic interests to defend.”
To this must be added Switzerland’s prolific lip service to its much-vaunted neutrality. It is imperative, especially considering Switzerland’s sullied World War II history, for it to stay mindful that neutrality cannot possibly justify inaction in the face of evil. In such circumstances, the claim of neutrality facilitates evil, such as Iran’s genocidal plot. Inaction can be tantamount to complicity.
Sanctions are imposed to make it difficult for a regime that endangers world peace to carry on unhindered. That is their objective. Money is fungible. Whatever isn’t denied Tehran – given the tyrannical nature of the regime – could well go to funding terrorism or nuclear weapons development.
The Swiss are not that naive. They are nobody’s fools. They should not make fools of the rest of the world.
- Zurich’s Gnomes Moving Tehran’s Lucre (israelnationalnews.com)
- Obama: Iran Has Nuclear Rights; I Did Not Want to Sanction Its Bank (iamiranaware.wordpress.com)
March 18, 2012: Sudanese rebels claimed to have recently shot down an Iranian Ababil UAV near the border with South Soudan. The Sudanese government eventually admitted it had lost another UAV, but said it went down do to component failure, not ground fire. Whatever the case, it is not the first time the Sudanese have lost one of their Iranian made UAVs. Several have been reported lost over the last three years.
The Iranians have been developing UAVs since the 1980s. The ones used by Sudan are the Ababil. This is an 82 kg (183 pound) UAV with a 3.2 meter (ten foot) wing span, a payload of about 35 kg (77 pounds), a cruising speed of 290 kilometers an hour and an endurance of 90 minutes. The Ababil is known to operate as far as 150 kilometers from its ground controller. But it also has a guidance system that allows it to fly a pre-programmed route and then return to the control by its ground controllers for a landing (which is by parachute). The Ababil can carry a variety of day and night still and video cameras. There are many inexpensive and very capable cameras available on the open market, as is the equipment needed to transmit video and pictures back to the ground.
The Ababil is also used in Lebanon, where Iranian backed Hezbollah has received about a dozen of them. The Israelis feared that the low flying Ababils could come south carrying a load of nerve gas, or even just explosives. Using GPS guidance, such a UAV could hit targets very accurately. Moreover, there’s nothing exotic about UAV technology, at least for something like the Ababil. Iranian UAV development got a boost from American UAVs received in the 1970s (Firebee target drones.)
From Strategy Page
- Iran’s shiny new Venezuelan Drone Factory (iamiranaware.wordpress.com)