US Congress mulls extending Iran sanctions
After imposing oil-related sanctions that penalize all foreign banks dealing with Iran, Democratic Senator Robert Menendez suggests penalties that would target banks for any significant transactions with the Central Bank of Iran, Reuters reports.
Menendez, who is a member of the Senate Banking and Foreign Relations Committees, said he is also looking at ways to freeze an estimated 30 percent of Iran's foreign currency reserves, held in banks outside the country.
"It seems to me we have to completely exhaust all the tools in our sanctions arsenal, and do so quickly, before Iran finds a way to navigate out of its current crisis," Menendez said as quoted by Reuters.
The new proposals come after Iran’s currency, the Rial, plummeted by 40 per cent over the past week, hitting an all-time low. This led to protests in the streets of the Iranian capital as inflation sharply drove up prices.
A senior congressional aide told Reuters that some lawmakers believe if all banking transactions except for food and medicine were included in the sanctions, the Iranian economy would soon collapse. "You really move to a total embargo scenario," the aide said. "The Iranian economy would collapse pretty quickly."
Meanwhile, the UN chief has raised concerns about the level of sanctions being felt by everyday Iranians as unemployment rises and lifesaving medicines appear in short supply.
“The sanctions imposed on the Islamic Republic of Iran have had significant effects on the general population, including an escalation in inflation, a rise in commodities and energy costs, an increase in the rate of unemployment and a shortage of necessary items, including medicine,'' UN General-Secretary Ban Ki-moon said in a report to the UN General Assembly released on Friday.
Ban stressed that humanitarian relief efforts have also been hampered, as payment problems have led to a shortage of medicines needed for treating diseases like cancer and heart and respiratory conditions.
The UN Security Council imposed four rounds of sanctions in efforts to pressure Tehran to give up its nuclear program, which the West fears is aimed at creating a nuclear weapon. Iran insists its nuclear ambitions are peaceful. The sanctions targeted Iran’s oil exports and cut off access to international banking networks.
The Western sanctions were designed to pressure Tehran into reversing its nuclear program, through limiting the government in its political and financial capabilities. But Shirin Shafaie, an expert on Iran, believes they have had the opposite effect.
The PhD Candidate at the School of Oriental and African Studies (SOAS), University of London, told RT “The government might be under a lot of political pressure but financially speaking it has gained a lot more leverage vis-a-vis the society. This means that the people have been weakened through sanctions and even more dependent on the government for their daily subsistence.”
Even though the sanctions are taking their toll on the population, the dire economic situation may not induce political revolt in Iran, the expert argues.
“Iranians do in fact see the current situation as an actual war and this in itself is helping incite more and more anti-American (or anti-Western) sentiments in Iran, even among the middle class, university educated families and the younger people.”
“The bottom line is that people think no matter what Iran does, the US will still insert pressure to weaken Iran as a whole. People have no illusions about the US/West friendship anymore, not even those who are highly critical of the Islamic regime.”
Sanctions do hurt but this doesn't mean that all the outcomes are negative argues Shafaie saying, “it was pressure that made Iran independent, not superficial friendships and collaborations like what we see in certain countries of the Persian Gulf.”
Despite piling international pressure, the Iranian economy has great potential, the expert believes. “Relatively speaking Iran has next to zero foreign debt and this, accompanied with the very low value of Rial, can in theory help boost Iran's domestic investment and export. So if Iran can handle this, then there will be almost nothing else left in the West's coercive arsenal to use to put pressure on Iran.”
The whole situation reinforces the argument that Iran has to diversify both its energy sources and its income, Shafaie states. “No one can say to Iran anymore "well you have oil, why do you need nuclear energy" and not seem unaware of Iran's current situation and the (un)reliability of its oil wealth.”
Moreover, the whole world has just turned a blind eye to the other side of the story which is Iran's rights under the Non-Proliferation Treaty (NPT), the expert concludes. “What about nuclear energy then? Maybe it's time to erase some Articles in the NPT as obsolete and irrelevant?”