Iran Sanctions [February 14, 2013]   [open pdf - 677KB]

"The principal objective of international sanctions--to compel Iran to reach an agreement that ensures that its nuclear program can only be used for civilian purposes--has not been achieved to date. However, the international community has imposed progressively strict sanctions on Iran's key economic sectors, harming Iran's economy to the point where key Iran leaders may be considering a nuclear compromise. Among the key causes of Iranian leaders' growing concern: [1] Oil exports provide about 70% of Iran's government revenues, and Iran's oil exports have declined to about 1.25 million barrels as of early 2013--a halving from the 2.5 million barrels per day Iran exported during 2011. The causes of the drop have been a European Union embargo on purchases of Iranian crude oil that took full effect on July 1, 2012, and decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defense Authorization Act (P.L. [Public Law] 112-81). To date, 20 countries have been deemed in compliance. [2] The loss of hard currency revenues from oil, coupled with the cut-off of Iran from the international banking system, has caused a collapse in the value of Iran's currency, the rial. That collapse prompted street demonstrations in October 2012. Other effects include high inflation (over 50% according to many experts), and a sharp drop in industrial production, as well as unintended consequences that include a shortage of some advanced Western-made medicines. [3] Some Iranians, particularly those linked to the government and its hard currency reserves, are finding ways around the sanctions, including creating front companies, using informal banking exchange mechanisms, cornering the market for some imports, investing in hard assets such as real estate and precious metals, and profiting from the drop in the value of Iran's currency."

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CRS Report for Congress, RS20871
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