On Sept. 12, Under Secretary for Terrorism and Financial Intelligence David Cohen announced that Iran’s crude oil exports have decreased by 55 percent since January 2012. “Today, the Iranian government is relegated to the backwaters of the international financial system,” said Cohen at the New York University School of Law. He described the impact of the Obama administration’s strategy for pressuring Tehran to comply with international nuclear obligations.
September 13, 2012
The following are excerpts from the Under Secretary’s remarks.
The Impact of Sanctions
Put simply, Iran’s economy is struggling. In part, this is due to the Iranian government’s continued gross mismanagement of its domestic economy. And in part, it is due to the effect of sanctions pressure.
Sanctions have hit Iran’s oil sector – by far its most important industry – hard over the past year.
Historically, oil exports comprised 80 percent of the Iranian government’s foreign exchange earnings and provided about two-thirds of its budget revenue.
Last year, Iran exported approximately 2.4 million barrels of oil per day to about 20 countries, making it the third largest oil exporter in the world, and earning it about $100 billion from oil sales.
As a result of actions taken since the beginning of this year, Iran’s crude exports have plummeted to approximately one million barrels per day, a dramatic 55 percent decrease.
This decrease in exports is costing Iran about $5 billion a month, forcing the Iranian government to cut its budget because of a lack of revenue.
Compounding this severe loss of revenue, Iran is also facing the loss of access to the modern international banking system. Sanctions have effectively terminated international access for most Iranian banks. This has had a number of important effects.
With its banks increasingly unable to finance trade or process international payments, it has become ever more difficult for Iran to conduct business beyond its borders…
In short, as long as Iran continues to reject the path to a negotiated resolution, we will continue vigorously to pursue the pressure track.
As I have tried to sketch out, we have in place now an enormously powerful set of sanctions, at home and around the world. It retains its essential conduct-based foundation, as it broadens out to target an ever more comprehensive set of Iranian financial and economic activities.
We will continue to devise new and enhanced sanctions – so long as Iran refuses to address in a meaningful and productive way the very serious concerns with its nuclear program.
And the impact from sanctions will only increase over time – as the financial sanctions continue to bite, the oil-related sanctions continue to drive down Iran’s oil sales, potential workarounds are stymied, and our partners continue to take complementary action.
We believe it is still possible to prevent Iran from achieving its goal through a combination of diplomatic and economic efforts. But while the diplomatic window is still open, there should be no doubt that it will not be open indefinitely, and that all options remain on the table to prevent Iran from obtaining a nuclear weapon.
Click here for the full text of the Under Secretary’s remarks.