The sanctions imposed by the US and EU against Iran to stop its nuclear program are having a devastating effect on the country’s economy.
Iran’s currency, the rial, fell 40% against the dollar last week. Iranians have been dumping rials to buy dollars and gold. Steve Hanke, a Johns Hopkins University economist, told Bloomberg inflation is much higher than the official number:
We’re getting into what is technically hyper-inflation,” with an “implied inflation rate” of about 70 percent a month, Hanke said.
That led to a retail general strike in Tehran as merchants shut their stores and protested in the streets. Lame-duck president Mahmoud Ahmedinejad, fresh from another round of Holocaust denial and Israel bashing at the UN, blamed “currency speculators” and called out the riot police. As The Wall Street Journal reported:
The demonstrations marked the first time in three decades that the conservative merchant classes, a backbone of the Islamic Revolution in 1979, have publicly turned against the government.
The economic chaos is a direct result of the sanctions that stopped Iran’s oil exports cold and cut it off from the international banking system. Said Richard Haass, president of the Council on Foreign Relations:
We’ve gone further with international sanctions than anybody thought possible—and they’re kicking in.
European and US officials want to impose even tougher sanctions, a move supported by Israeli Prime Minister Benjamin Netanyahu.
So, it was in that context that GOP presidential candidate Mitt Romney said this in a major foreign policy speech at Virginia Military Institute Monday:
I will not hesitate to impose new sanctions on Iran, and will tighten the sanctions we currently have. I will restore the permanent presence of aircraft carrier task forces in both the Eastern Mediterranean and the Gulf region—and work with Israel to increase our military assistance and coordination. For the sake of peace, we must make clear to Iran through actions—not just words—that their nuclear pursuit will not be tolerated.
Um, haven’t we done most of that? Sanctions are destroying Iran’s economy and social unrest is just beginning. We already have carrier forces deployed in the Persian Gulf. Our allies seem eager to tighten the screws until Iran backs down.
Right now, it looks as if Iran is continuing to enrich uranium and further develop its nuclear facilities. Over the next few months we’ll see if the economic pressure makes them cry “uncle” and return to the bargaining table. If they don’t, that will be the time to consider military action. Not yet.