Guest Post: Despite Sanctions, Iran's Economy Limps Along

Tyler Durden's picture

Submitted by John C.K. Daly of

Despite Sanctions, Iran's Economy Limps Along

In the 20th century, upright moral nations developed a new method of showing international opprobrium to rogue nations, the implantation of economic sanctions, designed to modify a recalcitrant nation’s behavior to accommodate international political mores.

The most infamous example is the U.S. unilaterally imposing an oil embargo on Japan in July 1941, which most historians now agree led directly to Pearl Harbor, as energy bereft Japan, importing 4/5 of its crude oil needs from the U.S., decided to seize the oil assets of the Dutch East Indies in order to continue its imperial adventures in China and southeast Asia.

Fast forward to 2013, and Washington is seeking yet again to use sanctions to influence Iran’s domestic policies, most notably its support for insurgent (terror) regimes and its civilian nuclear uranium enrichment program, which Tehran maintains is entirely peaceful, but which the U.S. and Israel assert in fact masks a covert program to develop a nuclear weapon capacity.

Iran is now unique in the world that it is currently subject to a series of sanctions regimes, including those imposed by the U.S., the European Union and the United Nations Security Council.

Even plucky Australia has gotten into the act, with Australian Foreign Minister Bob Carr announcing on 10 January that Canberra’s new sanctions targeted Iran’s financial, trade, energy, and transport sectors, telling reporters, "These sanctions further increase pressure on Iran to comply with its nuclear nonproliferation obligations and with UN Security Council resolutions and to engage in serious negotiations on its nuclear program."

So, how effective has western pressure been in bringing Tehran’s mullahcracy to heel?

On 7 January Iranian Oil Minister Rostam Qasemi told the country's budget and planning parliamentary commission that  Iran’s oil exports have plummeted by 40 percent as a result of the Western sanctions targeting the country’s nuclear program and that there had also been  “a 45 percent decrease in repatriating oil money."

Qasemi’s candidness was a significant climbdown, as previously he had persistently maintained that Iran's crucial oil exports were entirely unaffected by the U.S. and EU sanctions.

Whatever yardstick is used, the Western sanctions have diminished Iranian oil exports. While in 2011 the EU had purchased 18 percent of Iran's oil exports, that figure has now shrunk to zero, while other Iranian export markets, including China, Japan, South Korea, India and Turkey have  decreased Iranian crude oil imports from anywhere from 15 percent to more than 40 percent during 2012. According to the Organization of Petroleum Exporting Countries, of which Iran is the second largest producer, and the International Energy Agency, Iranian crude exports have fallen from around 2.4 million barrels per day in late 2011 to roughly one million barrels per day by December 2012.

Financial analysts estimate that plummeting exports, combined with the U.S. sanctions designed to exclude Iran from using international banking transactions to repatriate oil revenues are now costing the country roughly $5 billion per month in lost revenues. On 9 January Iran’s central bank stated that by the end of 2012 the country’s annual inflation rate soared by 27.4 percent, and that in October 2012, the Iranian rial lost about 50 percent of its value in one week.

Tehran refutes the nuclear allegations and maintains that, as a signatory to the Non-Proliferation Treaty and a member of the International Atomic Energy Agency, it is entitled to develop and acquire nuclear technology for peaceful purposes.

So, how effective have the sanctions been in moderating Iran’s behavior up to now?

Current indications are not much, despite the damage inflicted on the country’s economy.

On 9 January Iranian President Mahmoud Ahmadinejad said that Iran should establish more processing industries in the oil and gas sectors to reduce dependency on exports of crude oil and that the budget plan for the next Iranian year of 1392 (to start on 21 March) envisaged less dependence on crude oil revenues as the government intends to replace crude oil exports with oil derivatives to allow the nation’s economy to participate in the oil sector’s lucrative downstream industry.

An Islamic regime has controlled Iran for the last 34 years, and it is worth bearing in mind that, according to the CIA World Factbook, the median age of Iran’s population is 26, which means that half the country’s population knows no other political system.

Accordingly, what is the Farsi word for “stalemate?” A regime that has weathered more than three decades of tumult in its efforts to construct an Islamic society seems unlikely in an energy-starved world to ameliorate its behavior solely to please the dictates of Washington, Brussels, the UN and Canberra.

And oh, on 14 September 2012 the United States exempted Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and Japan from complying with the sanctions for another 180 days, a list that was expanded on 8 December to include China, India, South Korea, Malaysia, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan.

And, of course, the military option remains “on the table.”

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zilverreiger's picture

Fuck it hang that relinut


Manthong's picture

Iran is sitting on top of a sea of oil, 500T of gold and the two most  populated and growing nations in the world are willing to directly trade goods and even more gold for oil.

What could possibly go wrong when they have all that going for them?

The Gooch's picture

Hence, the propaganda in the 1st post.

Stir up the freedom flags.

Straw pastor.

Sick fucking world.


And why the fuck would anyone interpret that post as advocating war?

Bicycle Repairman's picture

These sanctions will have the Iranis reduced to eating grass in no time.  Just like the North Koreans.  I doubt they'll hold out beyond 6 months.  It's over for them.  We've even embargoed lawnmowers. The noose tightens!!!

h0oS's picture

LOL, over thirty years of sanctions yet Iran has the one of the highest rates of scientific progress in the world as measured by publications, never mind the fact that it now has a military manufacturing base and is actively exporting arms, oh and a nuclear programme, oh and a space programme... Wow those sanctions really must work...

Israel is shitting itself in a corner as the US slowly realises it has to do business with Iran and it will be prepared to sell Israel to the highest bidder.

There will be no overt war with Iran before the Israeli regime collapses and the US changes its foreign policy.

otto skorzeny's picture

Israel is going to lose the #s game as far as population-their reproductive rate is on par with W. Europe and hopefully US public opinion is turning against them with only the dying Neocons to shill for AIPAC-even if alot of congress trembles before them

SheepleInAction's picture

These sanctions will have the Iranis reduced


Isn't that how Arabs usually call "Iranians"? 

AgAu_man's picture

I dunno.... would not 'short' our 'Red Sea Pedestrian' (Monty Python humor) friends  just yet.

Fundamentally the two countries do not have a fight with each other directly. It's purely over the Palestinians.  If, say, the Orthodox elements of the Knesset keep the upper hand of extending their Settlements at the expense of the Palestinians, this will be viewed as Zionism, and will be objected by many parties and countries in the region and the world.  Most Israelis don't like it, but not enough to stop it, as they too benefit from having an Orthodox buffer in the region.  Simple human nature, nothing complicated.

The right-wingers for sure and probably many moderates in Israel can't be too happy about Iran helping their opponents -- now that their previous benefactor (Saddam) has been wiped out by their American friends and proxy-fighters.  I get that.  Without getting all emotional about it.

Problem is, they can't take them on themselves, and the Americans can't and probably won't either.  The alleged Upside is not worth the likely Downside.  Understandibly so.

Eventually, someone will have to be "thrown under the bus" in this Zero-Sum settlement game.  To their (Israeli) deep regret, it may have to be the Orthodox wing.  After the election, is my sense.  They are nothing if not stubborn, well-organized and financed.  Whether this is in Netanyahu's DNA or not, it is something he has to deal with and seems to be dealing with, with zest.

If you want to read real news on what's going on, you won't find it in the N. Am. news media.  It is 100% pasteurized and homogenized milk from a hundred cows.  The Jewish community does not like to "air" its laundry in public in the US.  At home... different story.  So read their papers online, and you get a far more diverse range of views.  As you'd expect from a smart, confident and oppinionated people.  The Ortohodox groups are (getting) more and more assertive and radical about their views and positions.  E.g. there is a quiet storm brewing there, where the Orthodox definition of Jew is very narrow and either objectionable or even offensive to many/most Israelis.  Family drama far, far worse than 'Dallas'.

What no one in the West has yet aired -- dared or allowed to air -- and what the Iranians themselves have done a piss-poor PR job at is:

The true purpose of an Iranian nuclear capability is not to use it as the ultimate offensive weapon, but as the ultimate retaliatory weaponThey are too smart to even think of 'attacking' Israel and its many, many nukes.  So the Israelis need not fear them.  What they probably 'fear', is that a nuclear-armed Iran can no longer be overthrown by their American proxy -- the way Iraq was.

And if Iran can't be overthrown, why then gunboat diplomacy fails in that region and -- G*d dammit! -- you'd actually have to negotiate with the Palestinians in good faith.  "God forbid!", say the Orthodox.  And then you're back at the Settlement Dilemma.

Any claim that Iran will/would arm outsider groups is so stupid, that it is not worthy of serious discussion with anyone with brains and intellectual integrity.  This is a 100% pure False-Flag (FF) argument, to redirect the debate:  From Settlement Policy to Anything/Everything else.  Pure & simple.

IMO, the biggest threat to world peace is not the technology per se, but the relentless march of extremist religious groups of all stripes.  In the Mid-East, as well as right here in the US.  Even on this site, I see some people who are all to happy to bring the gasoline and matches to the party -- as long as they get to watch someone else light it.

Hopefully, cooler, smarter heads will prevail in both countries and in the US.

Bicycle Repairman's picture

So you noticed that after eating grass for a decade that exactly zero North Koreans have starved to death.


Thanks for playing.

Bicycle Repairman's picture

These sanctions will have the Iranis reduced to eating grass in no time.  Just like the North Koreans.  I doubt they'll hold out beyond 6 months.  It's over for them.  We've even embargoed lawnmowers. The noose tightens!!!

otto skorzeny's picture

so dumb you had to post it twice

Bicycle Repairman's picture

That's what happens when it is intentionally dumb.

Maybe I should have said 'weed whacker' instead of 'lawn mower'?  A pie in the face, perhaps?

Jack Burton's picture

The more military force the USA sends to Pacific regions as part of their plan to shift to confront China, the more incentive China has to do business with Iran, the more reason they have to form alliance with Iran. The US may not get the free hand they want to destroy Iran with military force. China may not stand by and let their oil source and only Mide East friendly nation be conquered.

Russia is on the fence, they pretend to support Iran, but their support is very weak. China may have more incentive to back Iran. Russia does not need oil and markets for export of manufactured goods. But Iran is an ideal partner for China. Iran has oil and China needs it. Iran needs all sorts of goods and China has everything imaginable.

Every time the US pokes China in the eye, the more China thinks that Iran would be a great friend to have and worth defending against a NATO conquest.

Go Tribe's picture

Someone has to stop the U.S. I just wish it weren't the muslims.

TwoShortPlanks's picture

Sanctions are merely there to aggravate the public to revolt, nothing more.

brewing's picture

this was so close to being interesting...

jmcadg's picture

So that leaves the US and Azerbaijan as the remaining countries with sanctions against Iran - useful!

caimen garou's picture

 iran is like johnson grass, hard to kill a bad weed when you keep feeding it.

fonzannoon's picture

I thought we were watching the Iranian currency hyperinflate a few months ago? Now they are hangin in?

Big Corked Boots's picture

I was going to suggest we bomb them back to the middle ages, but apparently, it is still 1391 there.

Joe moneybags's picture

Great material, Boots.  Tough crowd here.

etresoi's picture

OK, you have proven that you are an ignorant ass, who has never been to Iran.  Take a walk through your urban ghettos and see your future.

zilverreiger's picture

Iran fin min said they are dumping USD and EURO today.

theprofromdover's picture

I think it grossly unfair that US didn't exempt Israel from sanctions, to trade with Iran.

Who knows, they might want to be pals.

zilverreiger's picture

No jew jokes please, or I sue you

TheFourthStooge-ing's picture


I think it grossly unfair that US didn't exempt Israel from sanctions, to trade with Iran.

Who knows, they might want to be pals.

They certainly were during the Reagan administration. Israel acted as a middleman, selling arms to the Iranians and being reimbursed by the US in what would become known as the Iran-Contra scandal.

knowless's picture

iran should hold true. sadly, in western media they will be portrayed as a "rogue" nation, and the east will sever them from their body politic as well, but in reality, geographically, they are doomed to be the board that the game is played on.


the only justice would be not treating them as proxy for the real war, which is not an option.


have fun america. reality comes home some day.

leave the persians alone please? put your house in order.

Raymond Reason's picture

It's hard to know who is good and bad in the world, what with all the deceit and subterfuge.  But one can look at who their enemies are.  If they be Israel, US, and UK, then they are probably doing something right. 

The Gooch's picture

If they be Israel, US and UK GOVERNMENTS and their handlers.


I'm pretty sure 99.999% of us plebes don't want war, deceit and subterfuge. Anywhere.



Anusocracy's picture

99.999% of us plebes don't run governments.

Raymond Reason's picture

The people are in some way complicit (as a group) and will pay some kind of price, i'm afraid. 

MachineMan's picture

Iran should tell the west to fuck off.

Taint Boil's picture



Take the "How Much Do You Know About Iran Quiz"



Setarcos's picture

I'm rather pleased that I answered nearly all correctly, or with an educated guess, e.g. I know that female participation in university education is high, but I under-guessed by about 10%.

I'm familiar with the giant strides Iran has made with defensive weapons, but I did not know at how little relative cost.

I'm pleased to see that few ZH members are anti-Iranian.

A Lunatic's picture

Dear POTUS, the threat of Iranians building a bomb, or harboring terrorists, or hacking our banks is no longer sufficient to control the American populace and has in fact become quite boring. New narrative please.........

otto skorzeny's picture

O is too busy trying to destabilize the US-why bother with Iran?

otto skorzeny's picture

the US only wishes our economy was limping along. and I'm sure Iran is devastated by Australia joining in. the aussies are totally dependent on china's use of their commodities-as Canada is upon the US

Urban Roman's picture

What is the difference between sanctions and austerity?

The Gooch's picture

140 characters on "The Twitter" -Ben

Magnum's picture

It defies logic that Americans would not want to be friendly with the one nation sitting on massive oil reserves.  Certainly we'd all have a higher standard of living if we had an active trading relationship with Iran.  Instead we have as a "best friend" the one nation with no resources, paranoid schizo people who believe themselves superior "chosen people", endless spying on us, mossad-did-911, USS Liberty, israel.  

How long the media can pull this salesjob off is anyone's guess.

otto skorzeny's picture

I saw that turd J Leno a few months back say something about Iran to his audience and then he said-"You know Iran is our enemy-right?".

Raymond Reason's picture

I don't think we're interested in trading, unless you mean paper for oil?  

Shizzmoney's picture

If TPTB thought that the civil disobedience during the Iraq War was bad......just wait until (if) an Iran War happens.

I suspect they kind of know this.  Because, it would be extremely disruptive to business.

CrashisOptimistic's picture

Iran is quite a ways post Peak.  Even before sanctions arrived, their oil output was falling.

Now they will do what most do.  They will obtain refinery capability and cease to export and have the audacity to keep what they have for their own citizens.

Have a look at Saudi Arabia's oil consumption increase of late and think about what oil importers face.

loveyajimbo's picture

Election over... seems the threat of Iran's nuke is now over too?  fast and Furious... over... benghazi... "I have a headache"... I think maybe the Constitution is "over" too...  viva the republic...

otto skorzeny's picture

O needed the jew vote in FL so he sent that macho,preeening, little shit ballerina Rahm down there to talk a tough game about Iran