November 18, 2011

Unintended Consequences from CBI sanctions

 In an attempt to “collapse the Iranian economy,” Senator Mark Kirk (R-IL) put forward an amendment to the 2012 defense authorization bill yesterday that would impose crippling sanctions on the Central Bank of Iran (CBI).
The so-dubbed “nuclear option” has gained increased momentum in Washington in light of the recent International Atomic Energy Agency (IAEA) report on Iran’s nuclear program activities.
In addition to the Kirk amendment, House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) led a letter yesterday to President Obama calling for him to sanction the CBI.
But the Administration has warned that such measures may in fact collapse the Western economy, not Iran’s.  The Director of the U.S. Treasury’s Office of Foreign Assets Control Adam Szubin, warned Congress that the sanctions could be a “boon” to Iran, saying, “If there is a hike in the price of oil, Iran gains. If there is a spike in the price of oil…there could be profound harm to the global economic recovery and a windfall to Iran.”
Another serious repercussion of the sanctions would be to undermine efforts made by the reformist Green Movement in Iran by strengthening support for the regime.
As CNN’s Fareed Zakaria recently explained after visiting of Iran, “the basic effect [of our sanctions] has been to weaken civil society and strengthen the state – the opposite of what we should be trying to do in that country.”

USA Today also reported today that existing “Iran nuclear sanctions hurt the middle class, not [the Revolutionary] Guards”:

“People using the open banking system, average businessmen, are having a much harder time doing business,” says Vali Nasr, an Iran expert at Tufts University in Massachusetts who served as an adviser to the State Department from 2009 to 2011. “There is political pressure (on the Iranian regime), but it’s not likely to change the attitude of the Iranian government on the nuclear issue.”

NIAC is organizing efforts to stop the Central Bank measure from moving forward, and expects the proposal to face a vote within the next two weeks.  You can join those efforts by sending your own letter here.

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