By Nadav Eyal
What are the Iranians doing when faced with economic duress? Trying to escalate military tensions, threatening action to provoke the Americans and wishing for someone to fire the first shot in the Gulf.
Translated By Viktoria Lymar
5 January 2012
Edited by Steven Stenzler
Israel - Maariv - Original Article (Hebrew)
The stammering sanctions of the EU and the U.S. are fastening the noose around Iran’s neck. For the first time, the regime is groaning under the pressure.
Our usual disregard for diplomatic measures and quiet agreements should be reconsidered this morning. The ramifications of the European oil embargo are far-reaching, much more so than another vague threat leaked from the close associates of the Defense Minister. For the first time over the past years, the Iranians seem to be sweating for real.
Locked in the West’s strangling grip, they are acting in half-panic by browbeating about assaulting American aircraft carriers and closing the Strait of Hormuz – a military smoke screen designed to cover up profound economic cracks that are starting to turn into a true catastrophe.
In the last month alone, the Iranian currency has lost 40 percent of its value. Tehran’s money changers are not willing to exchange it for foreign currency anymore and Iran, boasting about its ascent to prominence, is forced to cope with foreign currencies dominating the local market. The local television does not deliver the most important images: Long lines of Iranians on the way to the bank, seeking to withdraw their money and looking to convert it into gold.
60 percent of the Iranian economy is based on the oil industry, which absorbs blow after blow. In parallel, the Americans and their allies are tightening the siege on the Iranian Central Bank. The economic isolation and deficit of foreign currency has caused an insane rise of food prices in the country, and it has increased political pressure on Ahmadinejad’s failed government.
The Hard Fist of Bureaucracy
Now the Europeans come – those Europeans who get to enjoy deriding messages from our Ministry of Foreign Affairs – and take an aggressive and dramatic step. With the stroke of one resolution, they cut about 20 percent of Iranian oil exports.
The agreement on an embargo has been already reached, and at the end of the month the European Union will present the exact details, starting with the date the economic boycott will be put into effect. Europe, and mainly the countries of the continent’s south, such as Italy, Greece and Spain, buy 450,000 barrels a day. In the full swing of a deep economic crisis, the European Union shows Iran the door and makes it clear to them that their oil is no longer welcome on the continent.
This is the European Union; sometimes it appears as gaunt and technical, but behind lengthy statements, there hides the rigid fist of bureaucracy. When the Europeans feel bullied, when someone breaks into their embassies, they know how to take revenge.
The Iranians were quick last night to respond dismissively and promise that the oil is going to be easily sold to Asia. Technically, they are right. But the Asian countries are aware, too, that the Iranian oil export market is steadily shrinking, and therefore, the prices they are about to achieve in Tehran will be lower than the market prices. That would mean colossal losses to the Iranian economic system, already deeply distressed.
Loop Around the Neck of Iran
The other major factor is, of course, the American sanctions that have come into force against the Central Bank; in practice, they prevent refineries around the entire world from purchasing Iranian oil. The implications extend, naturally, far beyond America – a Brazilian refinery as well, for that matter, may find itself at risk should it pay for Iranian petroleum. Although Obama can grant an exemption to certain countries or businesses in order to prevent a dramatic surge in oil prices, he holds in his hands a doomsday weapon against the Iranian economy.
In view of these developments, it’s obvious why the generous subsidies provided by the Iranian government are now in jeopardy; with their elimination, the whole Islamic Revolution will stand in acute danger. In two months, there are parliamentary elections – the last ones have ended up in the victory of the Green Movement uprising, and the regime senses that it is pressed by "the street" big time.
There’s a broader conclusion here. The stuttering and voluntary sanctions of the European Union and America have been squeezing the noose around Iran’s neck. For the first time, the regime is groaning under the international pressure. What are the Iranians doing when faced with economic duress? Trying to escalate military tensions, threatening action to provoke the Americans and wishing for someone to fire the first shot in the Gulf. Only in this fashion will they succeed in inciting and diverting their public from the gloomy economic reality controlling their lives.
America and Europe demonstrate great restraint against the Iranian provocations. Once, there was a prime minister here who understood that “restraint is strength.” Now, Iran feels this restraint on its neck.
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