Analysis: International Sanctions On Iran
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This is MORNING EDITION from NPR News. I'm Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep.
The United States and other nations are preparing for another round of talks with Iran. The subject will be Iran's nuclear program. And this week a key party at those talks sent a sort of reminder: Britain imposed sanctions on an Iranian shipping firm, and it also moved against an Iranian bank. The move serves as a reminder of what some in the West want to do if the talks don't work out.
Alireza Nader, of the think-tank the RAND Corporation, is tracking sanctions against Iran. He's on the line.
Welcome to the program.
Mr. ALIREZA NADER (Iran Analyst, RAND Corporation): Thank you very much.
INSKEEP: I want to ask about the bank that the British moved against this week. What is Bank Mellat?
Mr. NADER: Well, it's a bank in Iran. It plays a very large role in Iran's financial transactions. And along with a number of Iranian banks, it has been suspected of helping Iran's nuclear program or missile program - in terms of financing and procuring some of the materials.
INSKEEP: Now, we should mention this is a bank that the United States actually moved against a couple of years ago during the Bush administration, and outraged Iranians when they did.
Have the sanctions had any measurable affect on Iran?
Mr. NADER: I think the sanctions have. It's harder for them to get credit to operate in financial markets. And it's harder to do commerce internationally when bank like Bank-e Mellat is sanctioned.
INSKEEP: I do want to ask though, when I was in Iran earlier this year, a colleague and I were asking business leaders about the effect of sanctions. And they argue that there's an affect - it imposes what they called a Transaction Cost.
Mr. NADER: Mm-hmm.
INSKEEP: It makes it a little more expensive for them to find some work around. But it doesn't actually stop Iranians from doing anything they really want to do.
Mr. NADER: It doesn't stop but it raises the cost, like you said. And Iran has a very poor business atmosphere to begin with, and not just for foreign investors but for every day Iranians - business people. So when you raise the cost of doing business, even in Iranians are not as likely to invest in their own country.
INSKEEP: Also in Tehran, I sat down with a businessman named Siddiq Samiy(ph). He's in Tehran. He's very well-connected. He believed that in the early weeks of this year, the late weeks of last year, that there were European businessmen, banking professionals, who were traveling to Tehran. And the subject of their trip was explaining to Iranians how to avoid sanctions by doing business with them.
Mr. SIDDIQ SAMIY (Businessman): They come over, even a few months ago, there were lots of Italian, French and Swiss bankers in town to tell us how to beat the system outside. They showed us exactly how to transfer the money to the neighboring countries and create fictitious companies through this system that it was created by the Europeans. We have survived.
INSKEEP: Are European nations unified in wanting to impose sanctions, or unified enough that they can pose a serious threat to Iran?
Mr. NADER: Well, I think the European countries have become much more unified on the need to pressure Iran economically. There is an understanding that the Iranian nuclear program has to be stopped one way or another. And I think one of the strongest leverage is European countries have with Iran are the commercial relations with the Islamic Republic.
INSKEEP: So if these talks don't go well, and if we're around the end of the year, as French President Nicholas Sarcozy has said, the time comes for stronger action - are there sanctions that are available that could be devastating to the Iranians?
Mr. NADER: Well, one sanction that has been discussed very regularly, especially in the United States, are sanctions on Iran's imported fuel products used for domestic consumption; because Iran is heavily dependent on fuel imports. They export energy, of course, but it doesn't have the refining capacity to take care of its domestic needs.
And that, potentially, could be very damaging to the Iran economy, and could apply a lot of pressure against the Islamic Republic.
INSKEEP: What's the downside?
Mr. NADER: The downside of sanctions against Iran?
Mr. NADER: I think the long-term damage to Iran will be felt really by the professional, middle-class, and upper-class. And some of these people - or a lot of these people actually - are the same people who came on into the streets in support of the so-called opposition against President Ahmadinejad.
So when we apply further sanctions against Iran, we have to question whether it really hurts the government or the people.
INSKEEP: Alireza Nader follows Iran for the RAND Corporation.
Thanks very much.
Mr. NADER: Thank you.
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