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Editorial: Tightening the screws on Iran

A PN perspective on the growing conflict

Iran is entering a dangerous period.

We know that there is a realistic way out of the crisis: transferring ownership and management of Iran’s uranium enrichment facilities to an international consortium, as advocated by retired US and British diplomats, and endorsed by a variety of Iranian officials and politicians.

We’ve said it before and we’ll say it again: if the west’s real concern is preventing Iran from getting a nuclear weapon, the consortium is the way to go.

Western rejection of diplomatic options (including brilliant work by Turkey and Brazil in May 2010 – see PN 2522) demonstrates that something else is at stake.

The scent of ‘regime change’ is definitely in the air.

Danger

We don’t believe that Israel is about to carry out an independent military strike on Iran, for reasons we set out in December (PN 2540-41).

However, US and EU financial and economic sanctions on Iran are starting to tighten viciously. The Iranian riyal has halved in value over the last year; inflation is over 20% (up from 14% in 2009); the official unemployment rate is over 11%; many workers have not been paid for months.

The US has been bullying international financial institutions to boycott Iran – the latest example being SWIFT, the Society for Worldwide Interbank Financial Telecommunication, which links together more than 9,000 banks in 209 countries.

On 17 March, SWIFT disconnected a large number of Iranian banks from its network (‘an extraordinary and unprecedented step for SWIFT’, its CEO commented), and both formal and informal financial institutions in the Gulf are stopping trade in Iranian riyals.

The financial sanctions are effectively economic sanctions because the big Iranian banks are cut off from the world financial system, and companies wanting to export to Iran are having to navigate a maze of smaller Iranian banks in order to get payment.

In practical terms it is impossible, so trade is drying up, which will lead to shortages of drugs and medical devices.

Analysts agree that all this financial and economic pressure (countries are also being pressurised to stop buying oil and gas from Iran) is unlikely to alter Iran’s commitment to nuclear power – it may actually strengthen it.

What the pressure is likely to do is to heighten the conflicts within the Iranian establishment, and possibly lead elements of the Iranian state into more unpredictable and violent action.

Exactly what Israel is hoping for.

Topics: Iran