IranNear economic collapse, Iran tries to buy time for its nuclear weapons program

Iran on Wednesday threatened to pull out of the nuclear talks with the P5+1, charging that the world powers are not flexible enough in setting the agenda for the third round of talks. This latest threat is but one more example of Iran’s negotiation behavior. To date, that behavior has not offered any indication that Iran intends to treat this series of talks differently from previous talks on the subject of Iran’s nuclear weapons program.

It appears that from the Iranian perspective, talks and negotiation are meant to achieve only one goal: buy the Iranian nuclear weapons program more time – time that can be used to enrich more uranium, enrich uranium to a higher level, conduct more ballistic missile test, and refine nuclear war-head design.

This Persian bazaar-like approach to negotiations, however, increasingly runs up against the ever-more-dire economic reality in which Iran finds itself in as a result of the tightening sanctions imposed on the country because of its recalcitrance.

• On 1 July the EU full oil embargo on Iran goes into effect. From that day on Tehran will lose one-quarter of its foreign sales revenues.
• Iran already has no customers for its oil. Ynet reports that Iranian tankers carrying some 30,000 barrels without a buyer are docked in the Persian Gulf.
• Iran can load and store up to 80,000 oil barrels in its thirty-nine tankers – but then it will have to shut down its oil wells because it will have no place to store the oil.
• Also in early July, the large global insurance companies will stop insuring not only Iranian tankers, but any other vessel carrying Iranian oil. South Korea, Japan, and other consumers of Iranian oil have already announced that they will be halt their Iranian oil purchases.
• These new sanctions will be added to harsh sanctions already in place. The most debilitating of the existing sanctions is the disconnection of Iranian banks from the global clearinghouse system, and the boycott on companies which maintain ties with Iran’s central bank or its oil industry.
• In addition to these sanctions, Iran’s economic situation continues to deteriorate because of actions taken by Saudi Arabia. The Saudis have increased their oil output to a 30-year high, with the aim of depressing oil prices. A few months ago analysts said that oil prices would rise to $150 or $200 a barrel, but as a result of the Saudi action the price has dropped to below the $90 a barrel.
• The lower Saudi prices, and the fact that Saudi oil and the tankers which carry it are not subject to sanctions, have already caused many customers to switch their oil purchases to the Saudis.
• The decline in oil prices is a massive blow to Iran, which draws about 80 percent of its revenues from oil exports.
• Iran already suffers from huge budget deficits, high unemployment, worthless currency, and out-of-control inflation.

The questions to be asked:

• Will the tightening squeeze Iran persuade its leadership to abandon their nuclear weapons ambitions in order to avert the economic collapse of the country?
• Will the increasingly dire economic conditions in the country lead to a regime change?
• Will the Iranians succeed in building a bomb before the economic collapse – a collapse which is inevitable if the current and added sanctions are firmly and universally applied?