AP / Vahid Salemi
To add pressure on Tehran to suspend part of its nuclear programmes, EU has imposed sanctions on Iranian oil. This is a move to put pressure on Iran’s nuclear policies. The US led sanctions campaign has already adversely affected the Iranian economy. The sanctions also include freezing of assets of the Iranian Central Bank in Europe. It also put bans on trade of precious metals, diamonds and petrochemicals.
In view of such sanctions, the Iranian currency is falling steeply. Iranians are stocking up amidst fear of future supplies. Around 70% of Iran’s revenue comes from oil exports. Iran has retaliated to the sanctions by threatening to close the Strait of Hormuz on the southern side of the Persian Gulf.
The EU hopes that these sanctions combined with harsher measures will back Tehran into coming to the bargaining table for considering its nuclear enrichment programme. In view of the sanctions new oil deals with Iran have been halted. Countries such as Greece depend largely on Iranian oil imports. To give them time to find alternative sources, the existing oil deals will run through till the end of June.
Iran reacted to the embargo by stating that it will only backfire and adversely affect the European economies which are largely dependent on Iranian oil. Iran on the other hand can always find alternative customers to export its oil.
Most of the European countries have backed the sanctions with the hope of getting Iran on the bargaining table. However, behind this support is also the fear that Israel and US might resort to military action against Iran if the economic pressure fails to back Iran into a corner.
Russia is against these sanctions and is of the opinion that Iran will not make any corrections to its nuclear policy under such sanctions. On the other hand, Greece and Italy are concerned about how this will affect their economies. With regard to this, the EU agreed to review the effects on the sanction on 1st May.
Western countries are of the hope that Iran’s revenue will be reduced by 20% or higher if the EU, Israel and South Korea cut off their imports from Iran. Other countries like China, Japan may also cut back on purchases or demand discounts. China is defiant and will not give in to the pressure of agreeing with the sanctions. However, it has already cut back on purchases in January and February and is also vying for discounts.