It has taken more than six years, but the day that State Department officials have been waiting for has finally come. The Iranian economy appears to be teetering on the brink of collapse, thanks to a chokehold of unprecedented international sanctions. On Monday and Tuesday, Iran’s currency lost 40 percent of its value. Protests have erupted in Tehran over the skyrocketing price of food. On Thursday, the regime arrested more than a dozen people on charges of manipulating the rial, Iran’s currency. The country’s central bank can’t shore up the rial with foreign reserves because much of those reserves — stored in banks overseas — have been frozen by the sanctions.
The collapse of the rial has proven that sanctions can have deep effects, even if China and Russia are not on board. The crisis in Iran also shows that the Bush administration did the right thing when it decided to work with Europeans back in 2005 to add heft to the American embargo that has been in place for three decades.
It is too early to tell whether the economic havoc will push Iran’s leaders to compromise on its nuclear program, which Iran insists is peaceful but the United States fears is aimed at building a nuclear bomb. On Monday, Iran’s Foreign Minister Ali Akbar Salehi called allegations against Iran “baseless” and “colonialism in a new shape.” But he also raised the possibility the issue could be resolved by negotiations, despite the failure of previous rounds of talks. “Each time that the two sides came close to some kind of mutual understanding, somehow it was disrupted,” he said. “But we have not lost hope.”
So far, Iran’s Supreme Leader, Ayatollah Seyyed Ali Khamenei has given little indication that he will bow to the pressure. His website said the world is punishing Iran for “refraining from submission to the system of dominance.” But Iranian people don’t seem to be buying it. “Down with this lying government,” merchants in Tehran’s central market reportedly chanted. Other reports indicate that some protesters held signs reading, “We don’t want nuclear energy.”
These were news reports that US officials could have only dreamed about back in 2005, when they first started working with France, Britain, and Germany on a packet of “targeted sanctions,” which included blacklisting certain banks and companies associated with Iran’s nuclear program. As time passed, and the regime still refused to halt uranium enrichment, the sanctions increased. More banks and companies were added to the list. Iran’s central bank was targeted. Finally, this summer, the European Union passed the hardest-hitting sanctions yet: an oil embargo that has reportedly halved Iran’s revenue.
The Iranian people are in pain. The cost of basic goods, including food, has risen 80 percent in the past year. There is a risk that Iranians will blame the West, rather than their own government, for their hardships. However, the suffering that comes with sanctions is less than with a war. As long as there is a chance that heavy sanctions might lead to a halt in Iran’s enrichment activities, sanctions should be pursued over plans for a military strike.