For several years the international community has steadily intensified pressure on Iran over its nuclear program, without much success. Below is a detailed review of current sanctions and other potential measures that could be adopted.
The UN suspects Iran of conducting a clandestine military nuclear program in violation of its international obligations. Since 2006, three successive UN sanction regimes have been established to pressure Tehran to cease its uranium enrichment activities.
Passed in March 2008, Resolution 1803 tightens travel bans and extends financial sanctions to 12 new companies and 13 executives. Melli Bank, Iran's largest financial institution with many foreign branches, felt the blow particularly hard.
The latest UN resolution condemning Iran came in September 2008. However, absent agreement from Russia and China, who both possess veto power on the UN Security Council, no new sanctions have been adopted as of yet.
US sanctions targeted Iran's energy sector. The Iran Libya Sanctions Act of 1996 threatens any foreign firm that invests over 20 million dollars a year in Iran's energy sector with financial repercussions. These measures have prompted Western companies to gradually abandon Iran, and in July 2008 French oil group Total became the last major Western company to throw in the towel. Its chairman, Christophe de Margerie, justified the decision at the time by citing "excessively high political risk" in an interview with the Financial Times.
U.S. sanctions have resulted in record fines for several major western financial institutions. In January 2009, the British bank Lloyds paid a 350 million dollar fine for facilitating bank transfers between Iran and the United States. In December 2009, Credit Suisse was fined 536 million dollars for effecting illegal payments.
So far, no action has yet succeeded in deterring Tehran from pursuing its uranium enrichment program.
In response to this intransigence, the U.S. Congress is currently preparing legislation that will penalize foreign companies supplying refined oil products to Iran. A bill to that effect was passed by the U.S. House of Representatives, which has set a deadline of 28 May 2010 to reach agreement with the Senate on the law.
According to U.S. lawmakers, this measure would allow them to strike at Iran’s Achilles’ heel, given that Russian and Chinese influence will probably limit the scope of future UN sanctions. Iran is a major crude oil producer and in dire need of refining capacity: it imports about 40% of its petrol.
Date created : 2010-05-05