In Iran, sanctions aim at shipping lifeline

Other shipping companies followed suit, and soon Iran was scrambling to find alternative ways to import food and other critical supplies. Now Iranian officials are warning of economic pain in the months ahead — precisely the effect that U.S. officials were hoping for.

After two years of failed efforts to entice Iran with diplomatic carrots, the Obama administration is quietly toasting successes at using economic sticks. A series of U.S. and international sanctions imposed over the past year have slowly undermined Iran’s ability to conduct trade by targeting the country’s access to international banking, insurers and transportation companies. Like Maersk, some firms voluntarily cut ties with Iranian companies that U.S. officials say are front operations for the Revolutionary Guard.

At the same time, the United States has backed international efforts to lower global petroleum prices, bringing the collateral benefit of stripping Iran of revenue that it has used to offset the economic costs of sanctions.

The measures have not slowed Iran’s race to make the enriched uranium needed to produce a nuclear weapon. But current and former U.S. officials say the sanctions are having unparalleled success in creating significant hardships for key Iranian industries.

“The impact is real,” said National Security Council spokesman Tommy Vietor, describing canceled or frozen projects in Iran’s energy sector alone that total $60 billion. With sanctions broader and deeper than ever, Iran finds it difficult to “do business with any reputable bank internationally, to conduct transactions in euros or dollars, to acquire insurance for its shipping, [or] to gain new capital investment or technology infusions,” Vietor said.

The U.S. actions have generated defiance among Iranian leaders and criticism from some Iran experts, who say the sanctions will harm ordinary Iranians more than the rulers — something the United States has generally sought to avoid. President Mahmoud Ahmadinejad last week sharply condemned Washington’s efforts to isolate Iran and insisted that the moves would backfire.

“Our efforts and powerful hands will ensure that our industry and production grow by dozens,” he told a group of industrialists. Iran also has lodged complaints at the United Nations, accusing the United States and other Western powers of depriving Iranians of basic rights.

Reliance on oil, imports

But other Iranian officials acknowledge that the impact of the sanctions on banking and transportation companies will be immediate and prolonged. A series of economic measures approved by Ahmadinejad over the past six years has made Iran increasingly dependent on cheap imports of meat, bread and fruit. Iran also relies on imports of a wide variety of goods from Asia and Europe, including computer chips and luxury cars.