If sanctions on Iran fail, war may be inevitable

The European Union joined the United States Monday in launching an economic war against Iran to force it to abandon a suspected nuclear weapons program.

By imposing an embargo on Iranian oil exports and freezing assets of its central bank, EU members hope to cut so deeply into government revenues Tehran will agree to accept international safeguards on its nuclear program.

But the sanctions themselves may be the penultimate step before a possible military attack.

Western leaders like Nicolas Sarkozy, the French President, have insisted stiff economic sanctions are necessary to avert a possible war with Iran.

But if sanctions fail, war may inevitable.

The EU is Iran’s second-largest oil customer, after China, and buys up to 20% of its oil.

If other U.S. allies, such as Japan and South Korea, follow suit, the sanctions imposed Monday could hit more than a third of Iran’s crude oil exports, which account for 80% of the government’s operating revenue.

The mere threat of sanctions in recent weeks has been enough to send Iran’s economy into turmoil, squeezing its banks and sending the rial plunging to its lowest level yet against the U.S. dollar, as frightened Iranians rushed to move their life savings into gold and foreign currency.

Iran’s economy is believed to be vulnerable to international sanctions after three decades of upheaval, regional conflict, government mismanagement and increasing sanctions.

The latest round of international penalties could influence Iran’s parliamentary elections, scheduled for March, as pressure from abroad may strengthen opponents of Iran’s theocracy. But it remains to be seen if it is possible to cripple the second-largest oil producer in the Organization of Petroleum Exporting Countries (OPEC) without also damaging the world’s economy.

Harsh sanctions against Iran could rebound against European countries already struggling with their own economic crises.

With Italy, Spain and Greece the main European importers of Iranian oil, the EU had to agree to phase in its embargo to give them time to adjust. It also had to promise cash-strapped Greece it would make up any extra costs Athens incurs as a result of the embargo.

For its part, Iran has threatened to strike back by immediately refusing to sell oil to Europe, instead of waiting for the EU sanctions to take effect July 1.

On Monday, two senior Iranian lawmakers stepped up talk of retaliation, saying Iran will close the Strait of Hormuz, through which 20% of the world’s crude oil flows.

Mohammad Ismail Kowsari, deputy head of Iran’s national security committee, said the Strait “would definitely be closed if the sale of Iranian oil is violated in any way,” while Ali Fallahian, a former intelligence minister and member of Iran’s Assembly of Experts, told the Fars News Agency Iran should cut off all oil sales to Europe immediately and consider curtailing shipping through the Strait.

Any move to close the Strait of Hormuz risks a major naval confrontation with the West.

The day before the EU approved its oil embargo, a U.S. aircraft carrier battle group, led by USS Abraham Lincoln and accompanied by a British Royal Navy frigate and a French warship, sailed through the Strait and entered the Persian Gulf in defiance of repeated Iranian threats.

The United States has another aircraft carrier, USS Carl Vinson, on duty nearby in the Arabian Sea and is scheduled to dispatch a third aircraft carrier battle group to the region in two weeks.

Iran has options other than closing the Strait.

“It could begin to aggravate upward pressures on oil prices by contributing to the growing instability in Iraq that has emerged since the U.S. completed its troop withdrawal and the Shia ruling clique has begun a de facto war of attrition against the Sunnis,” said Paul Stevens of the Chatham House think-tank in London.

“This could certainly cause problems with Iraqi oil exports. It could also make serious trouble for NATO in Afghanistan. It could also put huge pressure on the Gulf Cooperation Council exporters to be, at the very least, slow in offering replacements to Europe. At worst it could even threaten GCC export facilities.”

The United Nations has imposed four rounds of sanctions against Iran in a bid to convince it to abandon a nuclear energy program suspected of secretly developing nuclear weapons.

But Iran has repeatedly denied the charge and responded with increasingly strident rhetoric and outright belligerence.

Recently it announced it was manufacturing nuclear fuel rods on its own and expanding uranium enrichment operations at a heavily protected underground facility near Qom.

At the same time, Iran has tried to signal a willingness to talk, without seriously committing itself to negotiations.

While refusing to respond to an October EU invitation to open talks on its nuclear program, Tehran has agreed to allow a team of International Atomic Energy Agency officials to visit Sunday for three days “to resolve all outstanding substantive issues.”

Few critics expect much to come from the hurried inspections, noting Iran’s recent decision to accelerate its nuclear enrichment program already violates six UN Security Council resolutions and 11 resolutions by the IAEA’s board.

Some experts, however, warn that tightening the economic vise may backfire and embolden the regime.

“The more we turn up the heat on Iran, the more Iran will fight back, and the way they like to fight back [using terrorism and proxies like Hezbollah] could easily lead to unintended escalation,” said Kenneth Pollack, director of the Saban Centre for Middle East Policy at the Washington-based Brookings Institute.

“Iranians already see a concerted, undeclared war being waged against them by a coalition of the United States, Israel, Saudi Arabia and some European states. They are under cyber attack like the Stuxnet virus. Someone is killing their nuclear scientists in the streets of Tehran and blowing up their missile facilities.

“The United States and Europeans have ratcheted up their contacts with the Iranian opposition … and the Americans and Europeans are waging economic warfare in the form of increasingly crippling sanctions.”

National Post
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Source: National Post