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Iran Feeling the Squeeze

Iran is looking increasingly desperate as sanctions begin to bite. As we saw yesterday, public opinion in Iran does not seem to be rallying behind its unpopular government as the economic storm intensifies. Over the past few months the level of Iranian activity and bluster has risen even as its economy slid downhill.  Sanctions are clearly biting, but the question is whether they are working: are they moving the regime to back off on its nuclear plans? So fr, the answer appears to be ‘no’. The New York Times reports:

Iran will “weather the storm,” Foreign Minister Ali Akbar Salehi said on Thursday, adding that he was “not concerned at all” about the imminent ban on its oil by the European Union. The economic minister, Shamseddin Hosseini, likened the ban to “an economic war.”

“Iran, with divine assistance, has always been ready to counter such hostile actions, and we are not concerned at all about the sanctions,” Mr. Salehi said at a news conference in Tehran. “Just as we have weathered the storm in the last 32 years with the hold of God and efforts that we make, we will be able to survive this as well.”

After months of cajoling, it appears that the Europeans are fully on board with the sanctions program, and show little sign of backing down, and anti-European tirades from Iranian leaders will do little to persuade them to adopt a different course. Worse for Iran, however, is the news from Asia, where South Korea and Japan are also looking to cut oil imports from Iran. This will come as more of a shock than the European embargo: Korea has been very anxious not to give in fully to American demands, while an embargo will likely hurt the Asians more than the Europeans. From the FT:

The challenge facing Japan and South Korea is the dearth of alternatives to Iranian crude. Saudi Arabia, the only oil exporter able to ramp up production substantially when global oil supplies are disrupted, is the obvious choice. However, European demand for Saudi oil will also increase if it goes ahead with an embargo, leaving less available for the Far East. Growing appetite for Saudi oil will also eat into the Kingdom’s spare production capacity – a crucial safety cushion for the oil market.

More Iranian military exercises are scheduled for the winter.

The temperature is rising; the crisis unresolved.

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