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Congressional Research Service: Iran Sanctions

Author: Kenneth Katzman
December 2, 2011

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This Congressional Research Service report reviews the history and efficacy of U.S. sanctions against Iran, as well as broadening international support and compliance.

There is broad international support for imposing progressively strict economic sanctions on Iran to try to compel it to verifiably confine its nuclear program to purely peaceful uses. Many U.S. and international officials appear to agree that the sanctions have not, to date, hurt Iran's economy to the point at which the Iranian leadership feels pressured to accommodate core Western goals on Iran's nuclear program. As of September 2011, Iran's leaders have stated interest in new proposals that could form the basis of revived nuclear talks, although prospects for new talks have been set back by diplomatic rifts between Iran and several European countries in November 2011.

Whether or not core goals have yet been accomplished, the United States and its allies appear to agree that sanctions might yet succeed and that pressure should be added to further weaken Iran's energy sector and isolate Iran from the international financial system. The energy sector provides nearly 70% of government revenues. Iran's large trading community needs financing to buy goods from the West and sell them inside Iran. There have been a stream of announcements by major international firms since early 2010 that they are exiting or declining to undertake further work in the Iranian market, particularly the energy sector, taking with them often irreplaceable expertise. Partly as a result, Iran's oil production has remained relatively steady at about 4.1 million barrels per day, defying Iranian efforts to increase production. Iran has small amounts of natural gas exports; it had none at all before Iran opened its fields to foreign investment in 1996. Several countries, particularly India, have delayed billions of dollars in oil payments for Iran because payments mechanisms have been disrupted by sanctions. However, Iran's overall ability to limit the effects of sanctions has been aided by relatively high oil prices in 2011.

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