KAI RYSSDAL: It wasn’t so much BP that was driving oil prices today. Up $1.30, about 1.8 percent. Over the weekend Iran said not just no, but heck no it won’t stop its uranium enrichment program. The formal answer’s not due to the United Nations until tomorrow. But today U.N. inspectors were denied access to an underground nuclear fuel plant. The Security Council has threatened economic sanctions if Tehran doesn’t comply. And when you hear economic, think oil. Marketplace’s Hillary Wicai has that story.
HILLARY WICAI: Iran isn’t beating around the bush . . . so why should we? Experts say the US and the U.N. have little leverage to influence Iran through economic sanctions. Ray Takeyh is with the Council on Foreign Relations, a private think tank.
RAY TAKEYH: The international community will be happy to pass resolutions criticizing Iran, censuring Iran even. But when it comes to the core issue of putting their commercial interests at stake, then that’s when things fall apart.
U.N. Security council members Japan and China are the top two importers of Iranian oil. So they’re not likely to support a boycott. Iran does have one weak spot. It lacks refineries to turn its oil into gasoline. It imports at least 30 percent of its gas. Cliff Kupchan with the Eurasia Group says a gas ban, or petrol, ban could be effective, but it’s not practical.
CLIFF KUPCHAN: I think it would be very difficult, short of a naval blockade, which is an act of war, to actually implement a ban on imports of petrol to Iran.
That leaves narrowly targeted sanctions, like travel restrictions and wider enforcement of the ban on the sale of nuclear components to Iran. But analyst Jeffrey Schott with the Institute for International Economics says it won’t work; Iran simply has too much money. The country will eventually be able to buy what it wants. Schott says sanctions could slow Iran from joining the nuclear club a bit. And buying time, he says, even a few years, is important.
JEFFREY SCHOTT: Perhaps in that period of time we can develop a broader diplomatic policy that can bring Iran back more closely into at least a good relationship with its neighbors and with the western powers.
The U.N. Security Council resolution gives Iran until the end of the month to suspend its nuclear enrichment program.
In Washington, I’m Hillary Wicai, for Marketplace.