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Pulling Tehran's Purse Stings: Leveraging Sanctions and Market Forces to Alter Iranian Behavior

[Washington Institute for Near East Policy] Matthew Levitt - Already there are signs of domestic discontent within Iran, and targeted financial measures can produce further political pressure within Iran. According to the Economist Intelligence Unit, the nuclear crisis (and subsequent sanctions) "is imposing a heavy opportunity cost on Iran's economic development, slowing down investment in the oil, gas and petrochemical sectors, as well as in critical infrastructure projects, including electricity." A 2003 World Bank report on Iran noted the "daunting unemployment challenge" facing Iran and concluded: "Unless the country moves quickly to a faster path of growth with employment, discontent and disenchantment could threaten its economic, social and political system." We are already seeing the benefits of this strategy. Banks like UBS, HSBC, Standard Chartered, Commerzbank, and others have decided to cut off or curtail dealings with Iran. Some foreign banks are refusing to issue new letters of credit to Iranian businesses, and Iran now faces a standoff with Russia over Tehran's apparent desire to pay for Bushehr in euros, not dollars. Targeted financial measures are not symbolic sanctions. They have teeth, and Tehran is wary of their bite.
2007-03-16 01:00:00
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