October 16, 2012
EU Imposes Toughest Sanctions Against Iran
European Union governments Tuesday imposed their toughest sanctions on Iran over its nuclear program. EU and U.S. officials say sanctions are vital to curbing Iran's nuclear weapons ambitions. But some analysts say the sanctions have failed to do that and are causing Iranians to suffer as the value of Iran's currency plummets.
Shuttling across the narrow Strait of Hormuz are Iran's high speed smugglers.
Using boats equipped with 200 horsepower engines, they take goods - everything from luxury perfume to livestock - from Oman across to Iran, avoiding import duties on the way.
But the plunging rial currency is hitting even this illicit trade. The smugglers say Iranians can no longer afford their goods.
"It's very intense, over there, on that side, it's very intense. It's really hurting the people. The authorities are really hurting everyone and everything," said one teenage smuggler.
European Union ministers decided on Monday to expand sanctions against Iran and on Tuesday listed more than 30 Iranian firms as being targeted. Iran insists its nuclear program is for civilian purposes and denies it is trying to develop an atomic bomb.
The West says sanctions are the main way to pressure Iran and forestall military conflict.
"We have decided on a further package of sanctions, to increase pressure and make negotiations more substantial, in the areas of trade and banking, transport and energy," Westerwelle said. "In addition we will enforce measures to put an end to bypassing sanctions," said Guido Westerwelle, Germany's foreign minister.
Iran's economy, both legitimate and clandestine, is suffering. And on Tuesday, Iran slammed the EU sanctions as "inhuman and ineffective."
The plunging currency has sparked protests in Tehran.
"This is hitting the Iranians hard in the pocket. Also with the restrictions on imports, there's growing food shortages. That was seen especially around Ramadan with shortages of chicken for instance which again affected the ordinary Iranians incredibly. We're going to see this sort of thing increasing more and more," said Jamie Ingram, a Middle East Analyst at IHS Global Insight.
Analysts say sanctions targeting Iran's oil industry have hit hard and the country is scrambling to find new markets.
Iran's Energy Minister Majid Namjoo visited New Delhi last week and expressed hope that Indian businesses would invest in Iran.
"This opportunity will benefit India, enabling its private sector and private companies to obtain good prices from our country," Namjoo said.
Critics say the sanctions on Iran have failed to halt its nuclear program, while causing the people to suffer. Again, analyst Jamie .
"A large part of the social bargain between the ruling mullahs, the government and the people is based on the provision of services. This is going to become increasingly embarrassing for the government and the pressure could tell eventually," Ingram said.
With few signs of a diplomatic breakthrough, analysts say the latest round of EU sanctions will tighten the economic stranglehold on Iran's economy even further.