Will his New Sanctions on Iran Cost Obama the Presidency?
A sharp drop in the value of the Iranian currency as a result of new American sanctions may sound like good news to hawks in the US. But actually this development may signal ways in which Americans will also be harmed, and Obama may have put a second term in jeopardy, cutting off his nose to spite his face.
An amendment to the National Defense Authorization Act signed by President Obama this past weekend will seek to slap third party sanctions on countries and enterprises that deal with Iran’s central bank. It will go into effect this summer. In effect, the law says that if you buy Iranian petroleum, you cannot do business with American financial institutions. Since the United States is still over a fifth of the world economy, and most institutions with capital need to deal with it, the hope of Congress is that Iran will be left without customers.
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In short, even Congress’s more severe sanctions and targeting of Iran’s Central Bank are likely to be ultimately ineffective in changing Iranian policy or undermining the regime. The international community will find work-arounds and close US allies like South Korea, facing major economic consequences, will lobby hard for exemptions. Obama, who was forced into this law and had opposed it, has every reason to grant the exemptions. In other instances, the NDAA will cause American will to be tested. It will take a lot of impudence to attempt to impose sanctions on Chinese banks for dealing with Iran, when Chinese finance is so important to propping up the US economy.
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In signing the NDAA (which also allows the US military to arrest Americans anywhere in the world and to hold them indefinitely without trial), Obama has likely done harm to himself. Iranians will suffer some inconveniences and ordinary people may face real hardship in Iran. But the ayatollahs will still have their billions, and the regime will go on enriching uranium and supporting Syria and Hizbullah. The US, on the other hand, will suffer massive opportunity costs (i.e. it won’t do all kinds of things in the economy that it might have otherwise) from a policy of keeping petroleum prices artificially high by bothering Iran.
http://www.juancole.com/2012/01/will-his-new-sanctions-on-iran-cost-obama-the-presidency.html
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