I have a piece in this week’s Review section of The National arguing against the Refined Petroleum Sanctions Act of 2009 that we’ve been discussing on this blog quite a bit lately. The first few paragraphs are below, but click through to The National for the full article. -WW
Built to Spill
Americans like to think of sanctions as a targeted measure, but restricting Iran’s oil imports would distort trade in the whole region, argues Will Ward.
Iran’s Achilles heel, goes the mantra of many Washington hawks, is its dependence on imported petrol – the result of underinvestment in its energy industry during three decades of sanctions. While the country is a net oil exporter, Iran’s domestic refining capacity lags, forcing the Islamic Republic to import roughly a third of its daily petrol needs from abroad and ration consumer fuel purchases.
The US Congress is currently considering a bill, the Iran Refined Petroleum Sanctions Act, which would exploit this weakness by penalising companies and individuals that import petrol into Iran or invest in its domestic oil and gas infrastructure. The rosy logic behind the sanctions bill, which currently enjoys majority support in both houses of Congress, is not new: the hope is that ordinary Iranians, squeezed at the petrol pump, will pressure their recalcitrant leaders to halt uranium enrichment, embrace Israel and stop their unpalatable activities in Iraq, Lebanon and elsewhere in the region. That, or Tehran will lash out frantically in response, which will lead to an international consensus for even tougher sanctions – or worse.
Opponents of the bill have already pointed out many of its flaws: for starters, Iran could seek investments from Russia and China to build new refineries. Beyond that logistical loophole, it is also the case that Iranians generally support the country’s nuclear programme – and even if they didn’t, forcing Iran’s increasingly authoritarian government to reverse course would require months, if not years, of struggle and bloodshed. Sanctions against oil-producing nations often starve business and civil society, while the continuing flow of oil profits to the state leaves the targeted regimes more, rather than less, powerful – Saddam Hussein’s reign in Iraq being the best example.
But even this litany of concerns about the efficacy of sanctions leaves aside a critical issue: the potentially disruptive consequences for the wider region. America, the world’s most prolific user of economic sanctions, conceives of them as narrowly directed measures against the target state – the impact on neighbouring states rarely registers in Washington. But sanctions, particularly on consumer products with mass demand like petrol, tend to produce distortions in regional trade dynamics that can have political repercussions. Powerful incentives are generated to meet demand for the sanctioned products, inside and outside of the targeted state, creating economic imbalances in the region and political tensions with the state that has imposed the sanctions. And in the case of petrol sanctions on Iran these consequences are likely to be acute, given the long and storied history of trade relations across the Gulf.
0 Response to “On the Iran Refined Petroleum Sanctions Act”