*from Resetdoc.org by Antonella Vicini
“The European sanctions against Saderat Bank are illegal.” The announcement was made just days before the anniversary celebrations of the Islamic Revolution in Iran and was welcomed like a birthday present. And not only in the halls of power and of diplomacy. The gift, direct from Luxembourg and the European Union General Court, states that the EU has not provided sufficient evidence to demonstrate the involvement of Saderat Bank in Iran’s nuclear program and has asked for restrictions be dropped. Just last week, the court made a similar decision regarding Mellat Bank.
The governments of the 27-member states of the EU will have two months to submit an appeal to the Court of Justice, but the fact remains that the two judgments destabilize the West’s accusatory strategy against Tehran and open the way for 30 more similar cases pending before the court and concerning, among other things, the Iranian Central Bank and the national oil company, NIOC.
The sanctions are the strongest instrument used by Europe and the United States to hold Iran’s nuclear aspirations at bay and at the same time, pressure Israel. But they are not a novelty, although in recent years sanctions have had an increasing role in shaping relations with the West.
Sanctions, albeit intensified progressively since the opening of investigations into the country’s disputed nuclear program, go back to the attack by Iranian students at the American Embassy in Tehran in 1979.
Since then, in fact, the U.S. has unilaterally implemented a series of restrictive measures against the Islamic Republic.
Impediments range from the freezing of Iranian assets abroad (approximately worth $10 billion), to an embargo on the import of goods and services along with investments in Iranian oil and gas, the request for energy-sector sanctions on companies with foreign investment they are worth $20 million annually and the most recent actions implemented in 2007 that include a freeze on Central Bank assets of all the institutions associated with the regime, effectively ending the financial market for Iranians, and a ban on trade with institutions associated with civil aeronautics and transport.
To trade with Iran today, the U.S. Treasury must issue a permit. The goal? Economically isolate Iran and force diplomatic surrender.
Moreover, it is the rationale behind the measures described in the Charter of the United Nations (Chapter VII, Article 41), outlining steps that do not imply the use of armed force, but to give effect to the decisions of the Security Council.
In the case of Tehran, it refers to the first UN resolution on the Iranian nuclear issue, dated July 31, 2006, which asked the Islamic Republic to suspend all uranium enrichment and reprocessing programs by August 31 of the same year. Otherwise, punitive measures provided for in the Charter were to begin.
The first resolution served to implement a series of restrictions becoming increasingly more stringent over the years, from a ban on any nuclear-related material to the freezing of all assets of individuals or companies connected to Iran’s nuclear activities.
With the 2007 resolution, the landscape became less nebulous and measures to strike Tehran’s nuclear program became more severe. In addition to reaffirming what had already been established and to extend the ban to the sale of materials to build ballistic missiles, the names of companies were registered, while entities and persons associated with the regime and its nuclear activity were banned. Banks such as Sepah and Bank Sepah International, air force related companies, members of the Ministry of Defence and the Guardians of the Revolution, and scientists who worked on the nuclear program ended up on the blacklist and their assets were frozen.
In 2008, the circle tightened even further around companies producing dual-use goods. Resolution 1803 also expanded the list of ‘unwanted’ persons, that it is forbidden to transit through the territories of the Member States. There were also calls for a greater control over other Iranian banks such as Bank Melli, Bank Saderat and their subsidiaries. The resolution also precluded the transport of material to and from Iran.
In 2010, the final blow came from the UN – an even broader blacklist requiring all member states to apply further controls on financial transactions, transfers of funds and supplies, including through third parties. Inspections of cargo vessels and aircraft are advocated, in accordance with international law.
Up to this point measures had been more or less targeted to stifle Iranian enterprise in specific areas, but that, according to International Atomic Energy Agency report, does not seem to have been enough to break the will of the Iranian government to acquire nuclear technology.
The real “quantum leap” occurred instead with decisively more aggressive unilateral sanctions, determined by a number of states. Countries such as the 27-EU member states, Switzerland, Japan, South Korea, Canada, India, Australia and, of course, Israel, linear with U.S. policy. They struck at the primary sectors of the Iranian economy by banning investment and financial transactions. One example, that of Japan, the second largest buyer of Iranian crude, announced in January that it would implement concrete steps to reduce its energy dependence on Iran by 10%. Same applies to Seoul that represents 24% of Iran’s oil exports.
On January 23, Brussels also gave the OK for the oil embargo on Tehran, which entered into force on July 1, despite the fact that even as early as February, the Iranian authorities planned to halt sales to France and Britain in retaliation. In October, the member states increased measures also blocking the import of gas and expanding the ban on trade in all goods, unless specifically authorized. A few months earlier, in March, Iranian banks considered to be connected to the nuclear program were cut off from international trade operated through swift codes. An escalation that does not consider, perhaps, the side effects. Isolating an economic trade partner like Iran means, in fact, to be deprived of a fundamental market. Looking at the issue from one’s own backyard, Italy is the second European partner for exports from the Islamic Republic, after Germany. Our country also imports about 13% of its oil from Iran.
By weakening ties with Europe, the fourth largest producer of black gold (10% of global production) will look elsewhere for partners in the East – namely finding a favorable market in Turkey, China, India, Sri Lanka. No coincidence that China, together with Russia that refines crude oil, have always stood by the right to veto EU sanctions on energy resources from Iran.
Despite the rhetoric of the regime, that it has been able to survive under embargo for over 30 years (since the beginning of U.S. sanctions), there is no doubt that these years of economic crack downs are being felt.
According to the International Atomic Energy Agency, Iranian oil exports went from 2.2 million barrels per day, towards the end of 2011, to 860,000 for the month of September. Before these sanctions, Iran exported 4 million tonnes per year, valued at $4 billion.
In everyday life this has meant rampant inflation and resulted in the devaluation of the national currency, the Rial. On October 31, Deputy Minister of Commerce Hamid Safdel announced the decision to block the import of 2,000 luxury goods as defined by the Ministry that would be worth a turnover of approximately $4 billion to cope with the currency collapse. The defined luxury goods include jams, cosmetics, mobile phones, computers and automobiles. The goal to achieve self-sufficiency in an interdependent globalized market seems difficult to achieve.
Another example of how sanctions impact even the most mundane factors is the block operated by the U.S. on a number of components necessary for civil aircraft repairs and upkeep, preventing Iran to modernize its flagship carrier, Iran Air. The result is that some of the fleet’s crafts are now on the EU blacklist for security reasons.
In Italy, Iran Air currently offers departures only from Milan, due to a lack of available aircrafts. Not an insurmountable problem, of course, but it gives the idea of isolation that is only diplomatic. The same isolation that has resulted in Eutelsat to stop some channels’ satellite transmission signals such as Iranian Press TV, Al Alam, Quran, Al-Kowthar, IRINN, Sahar 1 and 2, Jam-e-Jam 1 and 2.
The fact is that the country that pushed most of all for sanctions and has applied more than any other, has increased the volume of its exports to Iran over the last year by 33%. According to the United States Department of Commerce, there was a jump from $150.8 million to $199.5 million worth of business deals in the first eight months of 2012.
The Great Satan against the rogue state, but with some exceptions. In addition to the sale of commodities such as milk and wheat, the U.S. Treasury has authorized the sale of medical equipment, although Iran’s lack of cash flow and the various sanctions make financial payments difficult.
Translated by Kathryn Carlisle