Sanctions on Iran
Anything to declare?
The squeeze gets tighter
MONEY may be the weakest point for Iran's nuclear ayatollahs. America's Congress has just voted to force banks, insurers, energy firms and others to choose: trade with Iran and you will be barred from business with the United States.
The UN Security Council had already slapped new sanctions on Iran for refusing to suspend its suspect nuclear work. That put once-friendly Russia and China in Iran's bad books too, for going along with the vote. Even Brazil and Turkey, clumsily trying to get some nuclear talks going, tell Iran it must show that its nuclear work is peaceful, as claimed.
Trade credits are drying up too. Even before the vote in Congress on June 24th, reputation-conscious banks, accounting firms, insurers (crucial for freight) and others had been pulling out of Iran or scaling down their business. Now France's Total has joined BP, India's Reliance, Malaysia's Petronas, Russia's Lukoil and others in stopping gasoline sales to Iran (which imports 30-40% of its petrol). Spain's Repsol is just the latest energy firm to junk contracts in Iran's gas or oil fields.
Spearheading this is the United States Treasury Department, under a vigorous official called Stuart Levey. Since 2007 financial intelligence on the deceptions practised by Iran's banks and firms has helped officials convince private companies around the world of the growing risk of finding they have inadvertently supported Iran's blacklisted nuclear or missile programmes.
Some fear that Chinese and other firms will snap up the lost business. But America's new legislation (if full use is made of it) would hit them too. Moreover, dwindling trade and the legal cover of UN sanctions have helped persuade even once-reluctant governments in Europe and Asia to stiffen their own trade restrictions.
Iran says no sanctions, however harsh, will dent its nuclear effort. And though this tightening squeeze drives up the cost of doing business, to the grumbles of the country's bazaaris, it has hit on several dodges to evade the Treasury enforcers: repeatedly renaming ships to evade port authorities' scrutiny, or bribing middlemen to route illicit shipments in roundabout ways to disguise their destination. Iran has also set up its own shell companies from the Caribbean to the Isle of Man.
Dubai, in the United Arab Emirates, was once the hub of Pakistan's Abdul Qadeer Khan black market (which first got Iran started in secret uranium enrichment). The UAE authorities recently let it be known that they had closed some 40 Iranian companies suspected of funnelling embargoed goods to Iran from around the world. Good news: but many hundreds more are believed to be at it too.
Iran has friends, not least fellow nuclear rule-breakers North Korea, Syria and Myanmar. Its president, Mahmoud Ahmadinejad, hobnobs with Venezuela's Hugo Chávez and Zimbabwe's Robert Mugabe. But there is little profit for Iran's merchants in such places. They operate in an increasingly friendless world where business is done clandestinely or for cash on the nail. Both are painfully costly.