Sanctions against Iran would work but they won't be tried

By Olivier Guitta

I just have an article on this topic in the latest issue of The Weekly Standard.
You can read the whole piece here.
Here's an excerpt:

After nearly four years of fruitless negotiations between the EU-3 (France, Germany, and the United Kingdom) and Iran over the nuclear issue, the U.N. Security Council on December 23 passed Resolution 1737. It imposed limited, almost meaningless, sanctions on the mullahs' regime. But it also set a clock ticking: If Iran has not agreed to suspend its enrichment of uranium by February 21, the Security Council may contemplate more severe sanctions.

The evidence that sanctions could work is significant. Consider the economic picture inside Iran. A roughly 100-page report prepared by the foreign affairs and defense commission of the Majlis, the Iranian parliament, and dated September 2006 was recently leaked to the French daily Le Monde. The report analyzes the economic and social consequences of potential international sanctions. The product of six months' intensive discussion among economists and oil specialists, it was circulated at the highest levels of the regime, and to president Mahmoud Ahmadinejad.

The report underscores the vulnerability of the Iranian economy--especially the oil sector--to sanctions. At first glance, it might seem that a country with the second-largest gas and oil reserves in the world has nothing to worry about. But as the report notes, 85 percent of Iran's revenue comes from the sale of oil abroad. At the same time, Iran imports most of the refined products it uses, like gasoline. Iran consumes half a million barrels of petroleum products per day, of which 40 percent is imported, at a cost of $3 to 4 billion a year. In the last few years, Iran's consumption of petroleum products has increased 10 percent per annum, putting added pressure on the oil sector. Rising consumption should come as no surprise, given population growth and the government-subsidized price of gasoline, among the lowest in the world at 800 rials a liter, or about 33 cents a gallon. Iran exports 2.5 million barrels of oil a day (3 percent of world consumption). An embargo on these exports would have a great impact, though it would not be felt for at least a year.

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