For more on the Iran sanctions situation, euronews was joined by Mehrdad Emadi, External Economic Consultant with the European Union.
“Mr Emadi, with Europe facing the challenges of the debt crisis, how can the region’s economy afford to take part in these sanctions?”
“The European Union does have such capacity in general, except for those members which, during the past year, have been constantly dealing with financial crises and debts.
“For those countries that have long-term, strong links with Iran, and which are meeting their energy needs from Iran, they will find it difficult to find other oil suppliers. That’s because Iran offers these countries flexible deals on payment and on price which, under the current circumstances, would be very difficult to find elsewhere.”
“What is the difference between these sanctions and the previous ones? By doing things like selling oil in other currencies (rather than in dollars) and finding new markets, can Iran get around these sanctions? And what will happen if China does not join the sanctions?
“I’ll answer the third part of your question first. The issue of China and its cooperation is very, very crucial (for the sanctions to be effective) because China buys more than 22 percent of Iran’s crude oil and this is one third of the total of oil that Iran exports. If China joins the sanctions, Iran’s oil industry would be directly (effectively) paralysed.
“That would cut Iran’s income to nothing, cash and the goods that some countries exchange for oil. Globally I must say that these sanctions have been more effective than Iran had originally thought they would be because, I think, Tehran had not taken into account that the main source of Iran’s hard currency income comes from selling oil and gas to the EU and Japan, and it will be a big deal if the European Union stops its oil purchases from Iran. It is true that the European Union buys 18.5 percent of Iran’s oil, but 40 percent of Iran’s hard currency income comes from its oil sales to the EU.”
“Although the west says that these sanctions are intended to put pressure on the Iranian regime, we’ve received emails from our viewers challenging that and saying that Iran’s people are being pressured by the sanctions, particularly the poor, and this will get worse and widen the gap between the rich and the poor. What do you think about this?”
“These recent sanctions — which include sanctions against Iran’s Central Bank and on Iran’s oil — have, in the past few weeks, led to a severe rise in prices of goods in Iran and also resulted in Iran’s currency, the rial, falling in value against hard currencies. What have seen in the past few weeks is the result of the new sanctions, but I have not seen anyone, at any level in the west, saying that Iran’s people should be put under pressure.”
“All in all, in your opinion, who will pay the greatest price from these sanctions, in the economic terms? Iran or the West?”
“Undoubtedly, Iran will pay a higher price. In the best scenario, if the cost of all this is going to be 50/50 for the two sides, we have 27 partners on the one side who will share the costs while, on the other side, the whole burden will be on the shoulders of just one country.
“However, it will not be equal damage for the two sides as the European Union needs Iran for its energy supplies; and for five European countries Iran is a great industrial market. However, Europe has been the engine and the main and fundamental source of Iran’s industrialisation in crucial areas. In this context, I think Iran’s economy will be paying the most.”