NEW YORK, April 30 – Iran seeks to resume discussions regarding its nuclear program after announcing that its exports hit $95 billion during March 2012-13 while under economic sanctions. Political posturing aside, Tehran’s economy is battered, yet the world powers are far from achieving a termination of uranium enrichment in Iran.
Sanctions have caused Iran’s currency, the rial, to depreciate by 80 percent, crude oil exports to drop 39 percent and inflation to rise 30 percent all last year, but Iran may only need sanctions to ease slightly so it can better maneuver international markets as it develops a new economic strategy. As long as nuclear ambitions trump economic woes in Iran, elimination of the program is unlikely.
Ali Bagheri, Iran’s deputy nuclear negotiator, said Iran requires 20 percent enriched uranium to fuel its current research reactor in Tehran and the other four that are being built. Iran is waiting for European Union foreign policy chief, Catherine Ashton to set a date to restart discussions with this figure in mind. Ashton liaises with Iran on behalf of the United States, China, Russia Germany, France, and the United Kingdom. Earlier this month, Bagheri failed to reach an agreement with these six global powers.
A compromise in the nuclear program is presumed to lead to concessions in the latest sanction measures. Negotiations have been an ongoing process of no results for a decade.
In 2011 the U.S. coordinated with other Western powers to ban financial institutions from doing business with Iran’s central bank and commercial banks along with conducting oil transactions. This measure is presumed to eventually trigger an economic collapse significant enough to motivate Tehran to make major concessions on its nuclear agenda.
Shamseddin Hosseini, Iran’s Minister of Economic Affairs and Finance admits that blocking the country’s banking system and oil exports has presented challenges, but believes there are ways to soften the economic hit and survive.
Iran has boost non-oil exports and looks to explore new markets in Africa, Asia and the Middle East. Barter payments such as gold replace U.S. dollars to settle trade transactions with Iran’s banks. Depreciation of the rial makes Iranian goods cheaper in the global market, which is a competitive advantage. Hosseini claims that the government’s foreign reserves are above $100 billion and the International Monetary Fund (IMF) expects Iran’s GDP to climb from a negative 1.3 percent this year to positive growth of more than 1percent next year.
Tehran continues to have a place in the oil market. China remains to be a top consumer of Iranian oil while North Korea and Turkey are considering deepening trade ties with Iran.
Iran may not declare bankruptcy next week or this year, but its economy is fragile. Economic critics point out that the IMF depends on Iran for data; therefore, the optimistic outlook is questionable. Some countries may continue an alliance with Tehran, but its list of top trade partners is dwindling. India will soon follow the European Union in severing oil imports.
Another round of talks will be unproductive and dangerous without conditions. President Barack Obama acknowledges that Iran has the capacity to develop a nuclear weapon “over a year or so”. Economic sanctions are working, but the world powers must be more assertive. Iran has a higher tolerance for economic decay than the Western powers, so there is a risk that sanctions without additional pressure will be futile. Given that time is becoming an issue, it is reasonable to demand that Iran return to negotiations ready to allow international nuclear inspectors to evaluate its nuclear program and willing to accept that it must curb enrichment activities.
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