“If sanctions targeted food shipments, Iranians would rally around their regime”

Posted on October 13, 2012


If the imposed on Iran sanctions targeted the food shipments into the country, if the Iranians would feel that the very basics of their lives were under attack and the outcome would be unambiguous – a rallying around the regime, Senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, James M. Dorsey believes.

Although the sanctions imposed on Iran do not target the food shipments into the country directly, it is still being felt.

A lot of Iran’s imports, including food and consumer goods, arrive on container, bulker and other ships, but the number of vessels calling at its ports has reduced by more than a half this year, because of the tightening sanctions.

United States and European Union suspect Iran of working towards making a nuclear weapon, while Tehran, denying this, says its program is only for peaceful purposes.

“Indeed, in a formal sense sanctions against Iran do not target food shipments, yet what they mean is that Iranians can no longer do any dollar transactions, except for in cash,” Dorsey noted.

An increasing number of Western companies, especially those in shipping and related businesses, are pulling out of trade with Iran due to the complexities of deals and tougher banking restrictions as the sanctions take hold – and out of fear of losing business elsewhere.

Dorsey underscored that all these difficulties that Iran is facing today because of the sanctions, also impact companies that are willing to export to Iran.

“It is difficult indeed. While Iran can still do business in other currencies, the collapse of the rial did not help. As a result, companies will start feeling that the difficulty of doing business with Iran is just not worth it,” Dorsey said.

The USD rate in Iran increased from 13,000 rials in the beginning of 2012 to 25,000 in mid September, but suddenly rose to 36,000 during a week on Iran’s open market in late September.