Iran ready to weather economic sanctions to continue its nuclear program

Within the past few days, Iranian supreme leader Ayatollah Khamenei and Iranian President Mahmoud Ahmadinejad have each issued statements implying that Iran will not give up its nuclear program. The US says it will not tolerate that decision.

Iran plans to weather economic sanctions

Reflecting their determination to proceed with Iran’s nuclear program despite the imposition of economic sanctions, Khamenei and Ahmadinejad have both stated that Iran needs to adjust its economy so it can live without oil export revenue.

Khamenei said Iran should wean itself off sales of its vast oil resources to power its economy. “Crude (oil) sales are a trap which we inherited from the years before the (1979 Islamic) Revolution,” he said, according to Reuters. “Unfortunately, the country has been stuck and efforts must be made so that the people of Iran are freed from that trap.”

In Khamenei’s view, it was important for the country to reach a point where it could easily shut down its oil wells and stop selling crude products. Khamenei and other Iranian officials have urged the adoption of a “resistance economy,” emphasizing greater reliance on domestic producers than on imports.

Ahmadinejad said Iran should stop exporting crude oil and instead should try to sell refined oil products. “We must go in such a direction that we do not export crude oil, and this is doable through the development of refineries and distribution,” he said, according to Reuters. He also recommended that “[e]veryone should accompany the government by cutting costs and transforming stagnant property into productive assets.”

Economic sanctions targeting Iran’s oil exports were imposed this year to persuade Iran to give up its nuclear program. While Iran insists its program is intended for peaceful purposes, Western nations believe Iran is working to develop nuclear weapons.

Over the past decade, oil exports have accounted for about 80 percent of Iran’s foreign revenue. But as a result of the recent sanctions, Iran’s oil exports have been declining significantly, down from the 2.2 million barrels per day in 2011 to about 1.1 million barrels per day today. The drop in oil sales means less money to buy the fuel and other products needed for consumers and businesses. Since the sanctions were tightened early this year, Iran’s currency has fallen and prices for basic goods have soared.

The Washington Post reports that Iranian central bank governor Mahmoud Bahmani called the sanctions “no less than a military war” and said Iran must respond with its own “asymmetrical” economic countermeasures.

Iran’s nuclear decision

It appears that Iran’s leaders have made a fundamental strategic decision. The recent recommendations to retool the Iranian economy imply that Khamenei and Ahmadinejad believe the oil sanctions will continue for some time and that there is little prospect of circumventing them. This suggests that the leaders have resolved to continue Iran’s nuclear program in spite of the economic dislocations and the reaction from the Iranian people that the consequent sanctions will cause. The leadership appears to be preparing to live with sanctions for a long time.

US reaction

During the visit of US Secretary of State Leon Panetta to Israel last week, Israeli Prime Minister Benjamin Netanyahu stated the issue succinctly: Sanctions and diplomacy have not stopped Iran’s nuclear weapons program.

Netanyahu said: “However forceful our statements, they have not convinced Iran that we are serious about stopping them. Right now the Iranian regime believes that the international community does not have the will to stop its nuclear program,” Haaretz reported.

Panetta responded by saying that the US would not tolerate Iran’s development of a nuclear weapon:

We will not allow Iran to develop a nuclear weapon, period. We will not allow them to develop a nuclear weapon, and we will exert all options in the effort to ensure that that does not happen. Make no mistake, we will remain determined to prevent Iran from ever acquiring a nuclear weapon.

An impasse has clearly been reached. Iran will not give up its nuclear program, and the US says it will not allow the program to progress to the development of a nuclear weapon.

The question Netanyahu raises is: What is the international community prepared to do next? The ball is now in their court.

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  • Mr T says:

    We will not allow them to develop a nuclear weapon but every day we allow them to continue to build a nuclear weapon.
    Hence, Iran continues to build a nuclear weapon and one day will have a nuclear weapon and the capability to build nuclear weapons as much as they want.
    But we will not allow it. That rings very hollow.
    Remember the Oil for food scandal in Iraq. Even our so called friends wanted to make money from that deal and undermine the countries that follow the rules. Russia and China will do it for Iran. Who is going to stop them?

  • Charu says:

    Iran has the perfect example for how to terrorize under the cover of a nuclear umbrella next door in Pakistan. It obviously works, considering how the Pakistanis have tied the world’s greatest power in knots.

  • KW64 says:

    NO, the ball is in Netanyahu’s court not the international community’s court. The international community seems content to sit back and see if sanctions will work. Israel however, cannot be so sanguine; they will make the move when they feel they must do so or risk oblivion.


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