New Articles on Iran: Oil Sanctions and Saudi Relations

PBS Tehran Bureau and Inside Iran published my newest articles yesterday. The first, for PBS, is a comprehensive review of the impact of sanctions on Iran’s most vital industry. It is a follow-up to the survey I did in May, which I’m proud to say has held up very nicely. The update breaks down the contract terms and liftings made by Iran’s top customers, the legal and illegal schemes Iran has employed to avoid sanctions, and what arrangements have been adopted in order to keep oil flowing, albeit at a dramatically reduced rate. The entire article is worth reading (I hope) but one point deserves to be repeated:

Most fortunately for Tehran, dramatic export declines were offset by a surge in prices. Brent crude, which is used as a proxy for world oil prices, sold for $95.16 in June — but then jumped to $102.62 in July and $113.36 in August. Remember also that the terms of credit extended to Iran’s customers allow some to pay up to 60 days later. This means that Iran only began counting diminished revenues this month, since sanctions were locked in July 1. Iran’s leaders may not fully understand the impact of sanctions for weeks. It may take several more months for Tehran to seriously reconsider its nuclear posture, which sanctions aim to change.

Sanctions may be two months old but the Central Bank of Iran, which processes oil transactions and reports revenues to the government, is only now starting to gauge their impact. So anyone who suggests that sanctions have already failed because they haven’t worked should know that sanctions only took effect in September. Iran’s commitment to its controversial enrichment program has only just begun to be tested.

The second article for Inside Iran is a quick review of Saudi-Iranian relations in a time of revolution. As I argue, Saudi Arabia has gone on the offensive since revolutions started sweeping the region early last year. The country’s “advantage… [is] further guaranteed by its huge investments across the region and the large number of expats who live in the Kingdom. It continues to benefit from a reservoir of shared identity and Sunni tradition that remain off-limits to its Shi’a Persian rival.”

Riyadh’s multi-billion dollar aid packages factor into this equation as well. While it remains to be determined just how much influence can be purchased, at the very least, Saudi Arabia has used aid to kick-start relations with post-revolutionary governments. At the same time, the Saudis deserve some credit for extending help to struggling nations, since much of it will be spent on development projects (silos, water projects, etc.) that will improve conditions for average citizens. Riyadh is also depositing hard currency in central banks around the region in order to protect nations against crippling inflation. (Qatar has done the same.)

The final paragraph addresses the formality of relations between Iran and Saudi Arabia, which I often refer to as “professional courtesy.” I might build this idea up into a serious article since it’s an intriguing angle that receives so little attention:

In spite of deep mistrust, Saudi-Iranian relations—very much like American-Soviet relations during the Cold War—nevertheless retain an air of correctness. Media on both sides demonize the other while embassies conduct business and officials meet when necessary. Even after Iran was implicated in last year’s assassination plot, the embassies stayed open; Iranians filed for Hajj visas. Proximity demands at least some contact.

Blogging has suffered lately because I was writing for other outlets. I planned on writing a retrospective on last week’s protests–with the benefit of hindsight, of course–but Marc Lynch beat me to it with his superb post on “The Failure of #Muslimrage.” Read it.

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