Obama Authorizes Oil Sanctions For Iran
by Jessica Iannetta | Syracuse University
Image courtesy of Flickr, DennisNewsquest
President Obama authorized sanctions on countries buying oil from Iran on Friday in an effort to depress Iran’s economy and further weaken its controversial nuclear program.
The sanctions penalize countries that do business with Iran’s central bank, Bank Markazi, by barring them from the U.S. economy if they don’t end their business with the bank. According to a Jan. 3 Wall Street Journal article, the sanctions are specifically aimed at Iran’s oil industry, which does roughly half of its business through the bank.
If countries significantly reduce their oil purchases from Iran, they are eligible to be exempt from the sanctions. The law does not explicitly say by how much a country must reduce its purchases, allowing the White House has left ample room to exempt close U.S. allies. Ten European Union countries, as well as Japan, have already been exempted after cutting their oil purchases from Iran.
“These actions taken by these countries were not easy,” Secretary of State Hilary Clinton said in a March 20 statement. “They had to rethink their energy needs at a critical time for the world economy and quickly begin to find alternatives to Iranian oil, which many had been reliant on for their energy needs.”
Several major importers of Iranian oil have not yet received exemptions, including China, India, Turkey, South Africa and South Korea. China, one of the largest importers of Iranian oil, has rejected the sanctions, saying that the U.S. has no right to unilaterally punish other nations. Behind the scenes though, China has been quietly reducing its purchases of Iranian oil, though this may stem more from a pricing dispute with Iran rather than the U.S. sanctions. The U.S. has quietly urged China to buy elsewhere, and Saudi Arabia has offered to fill any shortfall. South Korea expects to reach an agreement with the U.S. by the end of June on the sanctions, and Turkey announced that it is decreasing Iranian oil imports by 20 percent, according to a March 31 Associated Press article.
The U.S. is also working with close allies such as India, South Korea, and Turkey to decrease their purchases of Iranian oil and avoid the sanctions. Of these countries, India’s position is the most difficult, because it relies on Iranian oil for 12 percent of its power needs. Despite India’s claim that they are already heeding the unilateral sanctions, they have nonetheless been decreasing their dependence on Iranian oil. Contributing to this decrease is the difficulty in paying for the Iranian oil, as the U.S. and European Union sanctions have made international banks reluctant to handle transactions from Iran.
The oil sanctions stem from a December law, which imposed sanctions on Iran’s central bank but allowed Obama, until Friday, to determine whether world oil supplies were sufficient to continue forcing other nations to stop purchasing Iranian oil. The sanctions go into full effect June 28. A European oil embargo approved in January goes into effect in July.
The main aim of the sanction is to prevent Iran from continuing its contentious nuclear program. The U.S. and other countries believe Iran is developing a nuclear weapon, although Iran has denied this. The U.S. also hopes the sanctions will be effective enough to convince Israel that a military strike on Iran’s nuclear facilities is unnecessary, according to a March 30 Huffington Post article.
“I think our message to Iran is clear – we are serious about this sanctions regime,” Senator Bob Menendez, D-N.J., who co-authored the sanctions legislation, said in a March 20 statement. ”It is up to the Iranians to determine what they value more, their nuclear program or the political and economic stability of their state.”
For its part, Iran has stated that they have not been affected by the sanctions and further refuted the notion that their nuclear program has a military aspect.
“Sanctions against Iran’s oil sector have failed and will not block the progress and development of the industry,” Iranian Oil Minister Rostam Qasemi told the Tehran Times Monday.
It is not yet certain how the sanctions will affect U.S. gas prices. Tension and uncertainty over Iran has already driven up gas prices, and there is evidence that the sanctions could increase them further as the absence of Iranian oil makes a tight market even tighter.
Jessica Iannetta is a NGJ News & Politics Reporter, as well as a newspaper journalism and political science major at Syracuse University. She also serves as a staff writer for the The Daily Orange, SU's student newspaper.
