Iranians: Sanctions Fall Short of Intended Effects

The U.N. Security Council has imposed three rounds of sanctions against Iran over its controversial nuclear program. Washington has imposed sanctions on Iranian banks, designed to strangle Iran's ability to use billions of dollars of oil revenues in trade. The sanctions have had some effect, but ordinary Iranians appear to be more affected by government policies stemming from the international sanctions.

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Iran is perhaps the most sanctioned nation in the world. The U.S. has maintained a general trade embargo on Iran since the 1980s, but in recent years there have been more and more sanctions. NPR's Mike Shuster had this report on their impact.

MIKE SHUSTER: There are sanctions against three of Iran's best known banks, sanctions against the Iranian Revolutionary Guards, sanctions against key military leaders and against top civilians in the missile and nuclear programs. There are sanctions against Iranian companies that buy technology for the nuclear program on the international market. And just this month, on March 3rd, the U.N. Security Council adopted its third sanctions resolution authorizing the inspection of cargo containers bound for Iran. Despite all of this, says political analyst Saeed Leylaz, the sanctions are having a little impact on the government's nuclear program.

Mr. SAEED LEYLAZ (Political analyst): Essentially, for country with three hundred million U.S. dollar hard currency per day, the economic sanction is meaningless.

SHUSTER: Leylaz exaggerates a bit on how much Iran is earning from its oil exports. At $100 a barrel, it's probably closer to $250 million a day. For a nation with this kind of wealth, the sanctions, it appears, are having little impact on Iran's economic activities. That's not to say that sanctions don't create problems. Iran is isolated from certain financial practices common around the globe. Credit cards and international cash machines do not exist in Iran, a result of sanctions.

Mr. HAMID ZARHARI(ph) (Iranian oil business): I agree that the sanction creates more problems, but Iranians always find a way.

SHUSTER: Hamid Zarhari is in the oil business in Iran. Certainly companies like his continue to do global banking aided by the growing number of banks in Dubai and other states just across the Persian Gulf. Despite pressure from the United States, those banks are making lots of money on the movement of Iranian funds and the huge amount of trade in and out of Iran. Sanctions do have some impact inside Iran, says economist Ali Shams-Ardekani, but not on the specific targets of the sanctions.

Mr. ALI SHAMS-ARDEKANI (Oil Economist): Even if it is hurting, it's not hurting to the end that the Americans want. It hurts the poorer part of the Iranian society.

SHUSTER: The sanctions do worry Iran's government, and in response, the government here has pursued economic policies that have created additional problems. The government has run a budget deficit and has rapidly expanded the money supply. As a result, inflation has increased and is currently at 20 percent. The government has also been rationing gasoline in part as preparation for potentially harsher sanctions and that has imposed some hardship on the public says Heydar Pourian, editor of Iran Economics Monthly.

Mr. HEYDAR POURIAN (Iran Economics Monthly Editor): Our economy, partly because of government policy to international sanction, is experiencing more inflation and inflation is in the mind of the public. I think the number one issue at the moment is the inflation on general commodities and the prices on the housing.

SHUSTER: But sanctions have not been effective in persuading the Iranian government to stop enriching uranium. Over and over again, Iranian leaders insist that will not happen. But in the same breath, they continue to make an offer to the U.S. and Europe to join them in a kind of consortium to enrich uranium jointly and monitor their program closely. Foreign Minister Manouchehr Mottaki repeated that offer just a few days ago here in Tehran.

Mr. MANOUCHEHR MOTTAKI (Iran Foreign Minister): Our president offer two years and a half ago in the United Nations the ideas of consortium(ph). If any proposal is there for joining to this activity, we can consider that.

SHUSTER: So far the U.S. and Europe have ignored this offer entirely. Aside from their affect on Iran's economy, sanctions have had some political impact. Again, not the kind of impact the U.S. has hoped for. According to Saeed Leylaz, the sanctions have strengthened the political position of President Ahmadinejad and what Leylaz calls his radical hard line backers.

Mr. LEYLAZ: I cannot understand why they are imposing these useless sanction which is good for radicals. They like more isolation to cover and to hide mismanagement behind of this sanction and to have more control internally.

SHUSTER: All in all say many analysts here, the sanctions have stiffened the determination of Iran's key leaders, both President Ahmadinejad and Supreme Leader Ali Khamenei. To press forward with the acquisition of nuclear technology they say is for civilian purposes, but that could be used later on should they decide to build a nuclear bomb.

Mike Shuster, NPR News, Tehran.

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