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Thursday 24 Aug 2017 | 03:35 | SYDNEY
Thursday 24 Aug 2017 | 03:35 | SYDNEY

Iran: Oils aint oils

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25 September 2009 12:52

The record of sanctions regimes is mixed, to say the least. South Africa is often held up as the example of its successful implementation, whereas there are any number of unsuccessful ones, as this research illustrates. As for Iran, it would be fair to say that US sanctions to date have been annoying but obviously not effective. 

The difficulties with most sanctions regimes are threefold: (1) getting international agreement for a binding sanctions regime; (2) ensuring the sanctions cannot be bypassed through black marketeering; and (3) designing the sanctions so that they have a deep impact on the target government but don't harm to the population (which would weaken the international will for, and harden the target population's attitude against, the sanctions regime).
 
In the case of Iran, it appears the US is preparing for the failure of the 1 October talks by taking what at first glance appears a counterintuitive approach. Reports are that it is seeking to limit oil exports to Iran. This is counterintuitive because Iran is the world's fourth largest oil exporter, but sensible because it is a country with limited and ageing refinery capacity that needs to import 40% of its refined oil needs. There are already indications that oil companies are factoring this turn of events into their business plans.
 
At the same time, Russia's renewed enthusiasm for sanctions following the US withdrawal of its land-based European missile defences and claims of Gulf states' support for a harder sanctions regime shows that Iranian intrasigence may come at a significant cost this time.

Still, with long land borders, a vibrant cross-Gulf trade (including smuggling across the Strait of Hormuz) and an apparently reluctant China, it will be interesting to see how effective a sanctions regime the US is able to establish following the October meeting.

Photo by Flickr user Michael Foley Photography, used under a Creative Commons license.

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