Iran’s revenue from oil exports is off by 40% thanks to the sanctions imposed by the U.S. and EU over the Iranian nuclear program. Oil Minister Rostam Qasemi told the budget commission of the Iranian parliament, “There has been a 40 percent decrease in oil sales and a 45 percent decrease in repatriating oil money.” According to Agence France Press, the government there relied on the $100 billion oil exports brought in during 2011 to pay 60% of the government’s budget.
Economy Minister Shamseddine Hosseini has stated that oil revenues are off 50 percent since the embargo hit Iran’s oil industry back in July. OPEC and the International Energy Agency both estimated that crude exports have fallen from around 2.4 million barrels per day [mbpd] in late 2011 to around 1.0 mbpd by the end of last month. Including oil pumped for domestic consumption, Iran is producing just 3.0 mbpd, a level last seen back during its war with Iraq in the 1980s, and Iraq and Kuwait have moved up the production table putting Iran in fourth place – all of them trail Saudi Arabia.
So clearly the sanctions are biting, but I have never been one to put much stock in the effectiveness of embargoes and similar trade sanctions. Britain blockaded Napoleonic Europe, and Napoleon had his Continental System aimed at damaging Britain – in the end, things were settled on Europe’s battlefields. The American oil embargo against the Japanese in 1941 led directly to Pearl Harbor, which was hardly the point of the sanctions. The sanctions against Saddam Hussein’s Iraq did not change his behavior. South Africa’s apartheid regime didn’t collapse because of the trade sanctions imposed upon it. Instead, the collapse of the Soviet Union made it less important as an anti-communist bulwark, and it had been bled white (an unfortunate turn of phrase) trying to hold onto Namibia against insurgents as well as Angolan and Cuban mercenaries. And on the subject of Cuba, the U.S. still hasn’t managed to oust Castro by not buying cigars.
This isn’t to say sanctions don’t have a place in global politics. They send a powerful signal, and in many cases, they put some force behind a simple moral stance. Recalling an ambassador just doesn’t have the same impact.
However, we must be careful of expecting too much from economic sanctions and of not expecting the unexpected. I don’t believe for a minute that the Iranian theocrats are about to stop their nuclear program because their oil revenues are off. I don’t really think the regime there is going to fall because the currency is under pressure from the sanctions.
At best, putting the sanctions in place has given the west some carrots to offer Iran, the sanctions can be lifted bit by bit in exchange for more transparency. At worst, the sanctions have given the ayatollahs a reason to accelerate their research and acquire the means to make The Bomb even if they don’t actually build one.