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Russia, China and $200-a-Barrel Oil Buck Tough Sanctions

November 22, 2011

New sanctions on Iran announced by President Barack Obama and backed by Britain and Canada exclude the Iranian Central Bank, a key to the Islamic Republic’s energy economy.

Russia and China, with heavy investments in Iran’s nuclear development and energy sector, oppose the sanctions.” Russia’s Foreign Ministry called sanctions “unacceptable and contradictory to international law.”

The new American sanctions designate Iran’s financial sector a ”money laundering concern” in hopes that they will persuade more companies from dealing with Iran.

The prospect of having to pay $200 for a barrel of oil may be stopping President Obama – at least for now – from slapping sanctions on the central bank, which handles almost all of the financial transactions for energy.

The new sanctions by themselves spiked the price of crude oil to near the $100 a barrel level.

The new sanctions are designed to stop Iran from obtaining technology and money from smaller American companies who so far have not stopped dealing with the Ahmadinejad regime. Energy exports are not affected.

“It will be difficult to sanction oil exports,” Filip Petersson, a Swedish commodity strategist, told Bloomberg News. Given the current shaky economic situation in the world, a sharp rise in the price of crude could spark a severe worldwide recession.

The result is Iran’s enjoying profits from its gas and oil sector while continuing to develop an atomic bomb, which may not concern China and Russia because their economic interests in Iran may spare them from Iranian President Mahmoud Ahmadinejad’s rage – for the time being.

Iran is confident the new sanctions will not work. “Such measures are condemned by our people and will have no impact and be in vain,” Foreign Ministry spokesman Ramin Mehmanparast said Tuesday.

The Washington Post’s Jennifer Rubin opined, “Are we serious?… In the United States there is general agreement that sanctions on the Central Bank of Iran is among the few remaining steps that might influence the mullahs’ decision to press ahead with their nuclear [program]…”

“If the administration truly wants to avoid military action and finds it ‘unacceptable’ for Iran to get a nuclear weapon, it should be the one pressing for the toughest sanctions possible. Mark Dubowitz of the Foundation for Defense of Democracies thinks the pressure point is oil. He tells me that the immediate step should be to target oil sales involving the Central Bank of Iran and the Iranian Revolutionary Guard Corps.”

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