Obama Clears the Way for Tough Iran Sanctions
President Barack Obama is set to take a big step towards further constricting Iran in the global oil market, the Associated Press reports today. Obama has made the decision that the US can sanction foreign banks who do business with Iran because there is enough crude oil on the markets.
The tough sanctions on Iran, included in the defense authorization bill passed last year, prohibit foreign banks from operating in the US if they buy or sell Iranian oil. The legislation mandated that Obama had “until today to determine if there was enough oil supply on the world market to allow countries to cut their oil purchases from Iran,” the AP report states.
The AP explains further:
Many of the countries that buy oil from Iran are U.S. allies, including several European Union nations, Japan, South Korea and India. In order to provide flexibility to countries friendly to the U.S., the sanctions bill allows the U.S. to grant waivers to nations that significantly reduce their purchases of Iranian oil.
Even before today's decision, the State Department announced that it would grant waivers to 10 European Union countries and Japan because of steps they have already taken to cut back on Iranian oil. An E.U. oil embargo, approved in January, is set to take effect in July.
The United States. has not said what constitutes a significant reduction in Iranian oil purchases, and analysts believe the administration could use different metrics for different countries.
With oil prices already rising this year amid rising tensions over the nuclear dispute between Iran and the west, U.S. officials have sought assurances that pushing countries to stop buying from Iran would not cause a further spike in prices.
The current sanctions trajectory, which has not yet reached its zenith, combined with past sanctions are having a deleterious effect on Iran’s economy. Sanctions have helped devalue the rial, contributed to unemployment and damaged the quality of medical care in Iran.
The Obama administration’s move towards clearing the way for the harsh sanctions comes two weeks ahead of talks with Iran over its nuclear program.
The rationale for the sanctions was explained by the AP: “U.S. officials hope ratcheting up economic pressure will...push Iran to abandon its disputed nuclear program.”
But as Trita Parsi, the author of a new book on the Obama administration’s diplomacy with Iran, argues, “Seeking to sanction a country into capitulation is not a new strategy. It's a proven failed strategy.”