|← Monetary Policies||Singapore Macroeconomic Stability →|
The Crisis in Iran
In the 1950s, the United States helped Iran launch its nuclear programme as part of the “Atoms for Peace” programme (Carter, 1980). In 1974, the Shah of Iran established the Iran Atomic Energy Organization and announced plans for an ambitious nuclear program that would eventually include over 20 nuclear reactors. It is worth pointing out that the leading Western countries actively supported Iran’s nuclear program. In the late 1970s, Iran gave up the nuclear program to retract from the west and started its own nuclear programme. And this is where all the controversy started.
It is important to note that the Islamic Republic of Iran is a signatory to the Nuclear Non-Proliferation Treaty (Cordesman et al, 2012). Under article IV of the Non-Proliferation Treaty, Iran is allowed to engage in the peaceful production, research and development of nuclear energy. Article IV (2) of the NPT states: “All parties to the treaty under take to facilitate, and have the right to participate in the fullest possible exchange of equipment, materials and technological information for the peaceful uses of nuclear energy”(United Nations Treaty on Non-Proliferation Treaty 19..)
However, Iran is suspected of having secretly developed nuclear weapons at secret installations in its territory. That have raised doubts on its peaceful intention and its compliance with its obligation towards the treaty. Article II of the Non-Proliferation Treaty obligates states parties to the treaty to accept safeguards. This is set forth in an agreement to be negotiated and concluded between the International Atomic Energy Agency and the Agency’s Safeguard System. This was done for the exclusive purpose of verifying the fulfillment of the obligations Iran had assumed under the Treaty, and also with a view of preventing diversion of nuclear weapons or other nuclear explosive devices (Article 11).
A Chronological History of Economic Sanctions against Iran
In 2006, tension began between Iran and the IAEA. After the IAEA asked Iran to suspend its nuclear activities, it failed to do so and continued with uranium enrichment activities. Regardless of having in December 2003, Ambassador Salehi signed an additional protocol of the non-proliferation Treaty. This gave more power to the IAEA to investigate nuclear energy activities within the Iran boundaries (Forrer et al, 2003). Later on, the United Nations Security Council was forced to intervene.
On July 31, 2006, the United Nations Security Council passed Resolution 1696, demanding that Iran should suspend all enrichments and reprocessing, as well as research and development within its nuclear program (S/Res/1696, 2006). Iran failed to comply, and this was followed by Resolution 1737 of the United Nations Security Council calling for the freezing of financial assets of persons and entities involved in Iran’s nuclear activities and blocking of Iran’s imports and exports of nuclear materials (S/Res/1737 (2006). In 2007, following Iran’s failure to suspend its uranium enrichment activities, the Security Council again voted unanimously on Resolution 1747, thus imposing an embargo on all Iranian arms exports and extending the asset freeze and travel ban to members of the Islamic Revolutionary Guard Corps. A further ban on financial and trade activities was extended through Resolution 1803 in 2008.
The latest and strictest sanction was through Resolution 1929, which is an expansion of the previous resolution. It further subjects additional individuals and entities to asset freeze and travel bans, as well as bans financial services and insurance to Iran. In addition, Resolution 1929 authorizes inspection and disposal of shipments suspected of containing prohibited materials, if the suspicions are verified (Library of Congress, 2009). Iran is also banned from investing in uranium mining and other nuclear-related activities in other countries. The resolution urges countries to advise their companies, including banks, to refrain from doing business with Iran, if there are reasons to believe that such business could further Iran’s nuclear programme.
The above series of sanctions against Iran was hoped to paralyze the country’s economy. The nuclear program would become more expensive, and consequently the Iranian government would not be able to support it financially, thus causing it to stop. It is important to note that the Security Council’s resolutions are not binding upon other states, but they do have ‘political’ implications.
Will Economic Sanctions against Iran be Effective in Changing its Behavior with Regard to its Nuclear Weapons?
The economic sanctions against Iran are strategic in nature. As much as they are targeting the nuclear energy program, they are also aimed at paralyzing the Iranian economy. The gravity of the sanctions takes some time to be felt by the country's economy, and when it happens, the public will suffer (Library of Congress, 2009). Through economic sanctions, the international community hopes to achieve public resentment and opposition to the current Iranian government. This will happen once the inflation level goes high due to the trade sanctions imposed by the United Nations Security Council. The cost of living will also be unbearably high. Iranian citizens are likely to blame their government for the trade sanctions. This may lead to a revolution and a change of the ruling regime, or push the regime to seek a compromise with the international community.
Recent reports indicate that the Iranian government has not publicized any current and up–to-date economic data, such as information on the Gross Domestic Product (GDP). Current statistical reports reveal an unemployment rate of 20%, as opposed to 13% reported by the Iranian government. An inflation rate of 16% also contradicts the Iranian Central Bank’s figure of 14%..
The high level of unemployment is causing social distress and, consequently, strikes and public unrest (Martin & United States, 2012). The government is known to have suppressed protests, such as a strike of bazaar merchants over an increase in taxes in July, 2010 that lasted for nearly two weeks. The economic distress is also causing internal political rivalry. Iran’s Finance Minister fired six cabinet members and two Central Bank’s governors in response to the poor performance of the country’s economy
Oil exports are a key driver of the Iranian economy, but the sanctions have brought them to a complete standstill. Iran’s inability to procure western technology for production of oil has also brought production down (United States, 2007). The economic pressure has forced the government to change the way it operates. It is highly dependent on bribery, intermediaries and black market, which have brought the cost of obtaining these goods higher than usual. In 2010, the government did away with subsidy programs, which gave rise to suspicions that there was a decline in oil revenue.
Despite the economic deterioration and economic sanctions, Iran has not ceded ground, and its nuclear program continues to run. This has been credited to the porous boundaries of some countries, such as the United Arab Emirates. Goods are shipped to Iran illegally, and this subversion from the sanctions has continued to support Iran’s economy. A huge number of the United States military and dual-use goods are shipped through the UAE, Malaysia and Singapore. There has been an increase in cases of illegal delivery of goods to Iran.
According to Karim Sadjadpour, an associate at the Carnegie Endowment, trade between Iran, the United States and the EU has decreased. However, trade relations with China, India and Korea have increased substantially (United States, 2010). Despite the available evidence that Iran’s economic status has been affected by the sanctions, it is clear that the objectives of the sanctions are not likely to be achieved in the near future. For the sanctions to be effective, the international community must toughen the penalties on Iraq by fully isolating the country. However, some countries, such as China, are taking advantage of the situation. For instance, China’s trade with Iran has skyrocketed as a result of the sanctions. This not only serves as a detriment to the whole international community, but also makes the sanctions imposed by the Security Council ineffective (United States, 2007).
In conclusion, the United Nations Security Council should impose penalties against countries that continue to violate the sanctions. However, countries such as China have a veto power, and they are powerful enough to oppose the Security Council’s resolutions.
- 5% for more than 15 pages
- 10% for more than 30 pages
- 15% for more than 50 pages
- ...Customer's choices of either double or single spaced writing;
- ...300/600 words per page;
- ...1" margins on all sides;
- ...12 pt., Times New Roman font;
- ...Formatting style of customer's choice;
- ...Free reference page.
- FREE Email delivery;
- FREE revisions;
- FREE Title page;
- FREE Outline(on demand);
- FREE Plagiarism report(on demand);
- FREE Table of Contents(on demand);
- FREE Bibliography.