The American Interest
Analysis by Walter Russell Mead & Staff
Iran's Economy in Freefall as Oil Revenue Plummets

Iranian officials are calling it an “economic war”, and according to recent reports that’s an accurate description. Following new rounds of US sanctions issued yesterday, the Associated Press reports today that Iranian oil revenue has plummeted:

Iran’s revenues from vital oil and gas exports have dropped by 45 percent because of sanctions over its suspect nuclear program, a senior lawmaker said Monday, a clear admission that sanctions over Iran’s suspect nuclear program are having a severe impact.

Iran’s sanctions-driven financial crisis has led to collapse of the currency [and] proposals for an austerity budget … but its leaders have given no indication that they might give in to the pressure and scale back their nuclear development program.

The reduction in oil revenue is especially painful to an Iranian revolutionary regime that relies on crude oil exports for nearly 80 percent of their foreign revenue.

US sanctions and a European oil embargo have been pushing Iran towards the brink of an economic collapse for some time now.  But they have so far failed in their stated objective: to halt uranium enrichment.

Will the new sanctions imposed by the US this week might be enough to force Iran’s hand? The Washington Post reports:

While some previous U.S. sanctions targeted individuals and firms linked to Iran’s nuclear industry, the new policies are closer to a true trade embargo…

By broadening the focus to entire industries, the new effort is intended to make it harder for Iran to evade sanctions through front operations, a time-honored practice in the Islamic republic…

Between the growing pressure on its economy and the crisis in Iran’s last ally Syria, the Supreme Leader has a lot to reflect on. Let’s hope he decides to drop the uranium program. The alternative is an inexorable march towards a very ugly future in the Middle East.

Published on January 7, 2013 5:22 pm