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Iranian Regime Prepares For Oil Embargo

Written by A. Savyon and Y. Mansharof

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Introduction: 

On July 1, 2012, the oil sanctions imposed on Iran by the E.U. in December 2011 came into effect. During the months leading up to July 2012 and during the nuclear talks, spokesmen of the Iranian regime made numerous warnings, threats, and even pleas in an attempt to persuade the E.U. to cancel the sanctions, while at the same time stating that the regime was already making preparations to deal with them.[1] Apparently, the Iranian regime did not believe that the West would impose the sanctions, and now it is hurriedly attempting to prepare for them while also trying to exert pressure on the West.

Iranian_Karrar_attack_droneIt should be mentioned that another tactic typically used by Iran in times of crisis is waging terror indirectly, as a means of pressuring the West. Since Iran is currently limited in its reaction ability, it has a greater need to create provocations and trigger terrorism in the region, in order to exact a steep price from the 5+1 for the sanctions, and at the same time divert attention away from the nuclear issue.[2]

This report reviews the various measures taken by the Iranian regime in reaction to the sanctions: its efforts to prepare the public to endure them; its threats of violence against Western interests in the Gulf and Western targets around the world, as well as against Saudi Arabia and Israel; its threats to close the Hormuz strait; its attempts to find alternative routes for exporting its oil; and its calls to exhaust the diplomatic effort.

Iranian Preparations At Home: Urging The Public To Demonstrate Fortitude; The Oil Embargo Is An ''Opportunity"

Though the heads of the Iranian regime proclaim that the sanctions have no significant effect on the economy, and that they are even an opportunity to improve Iran's economic self-sufficiency,[3] some recent statements indicate that Iran's economic situation is, in fact, steadily deteriorating. In an extraordinary session of the Expediency Council on July 7, attended by Ahmadinejad, by the director of Iran's central bank, and by the ministers of oil, commerce, and economy, Expediency Council Chairman Mohsen Rezai said that government reports clearly revealed that Iran is facing an "economic war."[4] Commerce Minister Mehdi Ghazanfari said at a conference in Qom that the oil sanctions are "paralyzing" and different from the sanctions to which Iran has grown accustomed since the advent of the Islamic regime. He warned that Iran is currently involved in "a serious and dangerous confrontation requiring clever planning," and that the sanctions could increase even further, to include "logistic sanction." He explained that the West did not want to confront Iran directly, so it decided "to harm the regime using extreme economic sanctions and to sow distrust among the people towards the regime and its officials."[5]

After Iran's Broadcasting Authority published the results of two recent polls – which revealed that some 60% of respondents favored halting uranium enrichment in return for a gradual easing of the sanctions, and 89% expressed opposition to Iran's closing the Hormuz Strait[6] – there were increasing calls by Iranian officials to launch a campaign for increasing public fortitude and support for the regime. For example, Yadollah Javani, an advisor to Khamenei's representative in Iran's Islamic Revolutionary Guard Corps (IRGC), called on the government to do its utmost to prevent a "bad" reaction among the public to the rise in the cost of living.[7] At a meeting of the Experts Assembly, the assembly's deputy chairman, Ayatollah Mohammad Yazdi, said that the oil embargo would not cause the regime to withdraw from its position on the nuclear program, and that for this reason, the impact of the sanctions on the cost of living and on the people was an important issue. He called on the regime to launch propaganda campaigns among the people in order to persuade them of the benefit of enduring the sanctions with fortitude.[8] The student Basij, on the other hand, protested the cost of living and demanded that the authorities address the economic problems, and thus demonstrate that they are aware of the people's distress.[9]

Survey_removed
The survey removed from the Broadcasting Authority website. Most respondents are in favor of ceasing enrichment
.[10]

Survey_removed_2The survey removed from the Broadcasting Authority website. Most respondents oppose closing the Strait of Hormuz.[11]

On July 16, 2012, Experts Assembly member Alam Al-Hoda even hinted at more active measures to be taken by the regime vis-à-vis the public. He said that the Basij is now charged with the important task of "restraining" the public, considering its potential reaction to the oil sanctions, and preserving its sense of identification with the regime.[12] According to reports, the regime has banned any further discussion in the media regarding the impact of the sanctions on society.[13]

Conditional Threats To Hit Western And Gulf Interests

1.        The commander of the IRGC air force, Ali Hajizade, said that Iran would strike 35 American bases in the region and in Israel using its missiles, calling them "quality targets" that would be destroyed "in the first minutes" following an attack on Iran.[14] He added that "on the day of truth, IRGC missiles will strike our enemies like bolts of lightning."[15]

Shihab-3_Missile
Shihab-3 Missile.[16]

2.      Acting commander of the IRGC Ground Force Operations Division Morteza Mirian said that Tehran can reach its enemies thousands of miles beyond its borders. He added that all enemy bases were covered by Iranian missiles, and that the enemy was especially vulnerable in the Persian Gulf. He also said that, unlike the enemy, Iran's fighters do not fear death, but rather see martyrdom for the sake of Allah as the pinnacle of glory. He stressed the importance of the Basij fighters – "Iran's atom bomb" – in Iran's plans, and added that "Iran's security lines in Lebanon [probably in reference to Hizbullah] create increasing danger for the enemy."[17]

3.      On the eve of the sanctions coming into effect, IRGC Deputy Commander Hossein Salami said: "In our strategic plan, we defined a radius of deterrence including all the strategic interests in the region, so that, during a conflict or war, we can manage them on every level... The IRGC has the ability to attack stationary and mobile targets. [It also has] steep trajectory ballistic missiles that enter the atmosphere at several times the speed of sound, and can rarely be intercepted or destroyed... The IRGC navy's missiles have advanced capabilities in terms of range, accuracy, radar evasion and velocity, and they can be fired from various launchers... We have reached [a level of] achievement that I doubt even missile pioneers like the U.S. and Russia [can match]... I firmly insist that we can hit all moving targets with 100% [accuracy]."[18]

Iranian_Karrar_attack_drone1
Iranian Karrar attack drone.[19]

4.      IRGC Navy Commander Ali Fadavi said that Iranian intelligence is closely monitoring the American forces in the Persian Gulf, and has hundreds of craft there during all hours of the day. He added that "today, the situation is such that we choose the field and determine the rules of play."[20] Fadavi said further that the smaller boats, which are faster and more maneuverable, have missiles with a range of over 220 km, and will hopefully soon be equipped with 300 km missiles.[21]

5.      Deputy Chief of Staff Masoud Jazayeri said: "If the security of Iran or its allies is threatened, Iran will undoubtedly respond appropriately and resolutely. We have added a tier to our military doctrine, according to which we will not merely defend ourselves in case of a threat. If attacked, we will respond with an attack. We have prepared [to launch] large-scale and multilayered attacks, if necessary."[22] Two weeks later, Jazayeri ridiculed statements by U.S. officials regarding the deployment of 200 missiles to prevent Iran from closing the Strait of Hormuz. According to him, the U.S. will not be able to use missiles to impose its will on a country as large as Iran, "which completely controls the strait." Jazayeri stated that "without a shadow of a doubt, Iran will confront the U.S. if it harms its interests."[23]

6.      An article in the IRGC weekly Sobh-e Sadeq that discussed the Iranian response to the oil embargo claimed that Iran "will not simply abandon its national interest, [but] will take any necessary action to secure it." The article reviewed the courses of action available to Tehran: blowing up the nuclear talks; continuing the talks while introducing further difficulties and complications; closing the Strait of Hormuz, or at the very least restricting oil tanker passage; and "adding to the regional problems of the U.S. and the West." He promised that Iran would choose the option that best serves its interests.[24]

7.      An Iranian website close to the IRGC claimed that the Iranian Hout missile is one of the world's fastest radar-evading naval missiles, and is three times faster than its American counterparts. The website explained that "launching two such missiles at random American warships in the Persian Gulf would inflict a deadly blow, leaving them no escape." The website claimed that only Iran and Russia possess the technology to manufacture such a missile, but that the Iranian model exceeds its Russian counterpart, havng been upgraded by the IRGC, and can be launched from ships or submarines from a depth of up to 100 meters.[25]

8.      Press TV reported that during the Great Prophet 7 military drill, the IRGC successfully employed unmanned aerial bombers against mock bases of trans-regional forces in Iran's Lut Desert.[26]

Hout_missile
Hout missile.[27]

Conditional Threats To Destroy Israel

Senior military commander Mostafa Izadi said that an attack on Iran would lead to the destruction of Israel: "If the Zionist regime tries to take any action against us, this will spell the end of its existence. There is no doubt that they are unable to harm Iran and its regime in any way... The existence of numerous [Iranian] islands in the Persian Gulf has provided us with great capabilities, making the Islamic Republic the [superior] defense power in the region."[28]

9.        The commander of the IRGC air force, Amir Ali Hajizadeh, also claimed that "if the Zionist regime makes a wrong move, it will give us an excuse to wipe it off the [face of the] planet."[29]

Threats To Target Saudi Arabia

10.  Experts Assembly member and former intelligence minister Ali Fallahian called on the regime to "punish Saudi Arabia" for its crimes in Bahrain, Syria, and Yemen; for increasing oil production, which lowers the price of oil in violation of OPEC agreements; and for executing Iranian citizens. According to him, punishment by Iran would encourage the Shi'ites in eastern Saudi Arabia and in Bahrain to rise up against the regimes in these countries.[30]

11.     Majlis member Nasser Sodani called on the regime to demand that OPEC impose penalties in order to prevent Saudi Arabia from continuing to fund the oil embargo on Iran.[31]

Iran Continues Threats To Close Strait Of Hormuz, While Acknowledging That This Violates International Law,
Harms Its Allies (Iraq, China)

Iranian officials have made contradictory statements on closing the Strait of Hormuz. On the one hand, they continue threatening to close the strait, and, in light of the expansion of U.S. presence in the Gulf (aircraft carriers and minesweepers), they have even increased these threats. At the same time, their statements indicate that Tehran is aware that closing the strait would be a de facto declaration of war on the world, and legal cause for international steps against it; it also realizes that it would harm its allies, China and Iraq. Therefore, it can be suggested that Iran's goal in uttering these threats is mainly to raise the price of oil, which is at a relative low.

The_Strait_of_Hormuz
The Strait of Hormuz.[32]

At a Basij conference on June 19, 2012, Hossein Salami implied that Iran would close the Strait of Hormuz and said: "The whole world knows that 60% of the world's energy [resources] are in our hands, and that the peaceful functioning of the global economy is subject to Iran's will. This is our ability and our might, since we control the world's economy, and the entire world knows it."[33]

In late June 2012, the commander of the Iranian army's ground forces, Ahmad Reza Pourdastan, was asked: "Will Iran use its [advantageous] position in the Strait of Hormuz if the West increases the sanctions against it, especially regarding oil?" Pourdastan replied that "new sanctions being leveled by the arrogance [i.e., the U.S. and the West] will not influence our moves, but if conditions arise in which the Iranian nation feels threatened, it will use all [its] means of pressure, including in the Strait of Hormuz."[34]

When the sanctions came into effect, the editor of Kayhan, Hossein Shariatmadari, repeated his call to close the Strait of Hormuz, and added that the regime should boycott European companies in response to the oil embargo.[35] The head of the Majlis economic committee, Arsalan Fathipour, told Al-'Alam TV that "if a complete embargo is imposed on Iran, it will not let a single drop of oil pass through the Strait of Hormuz."[36]

Yadollah Javani, an advisor to Supreme Leader Khamenei's representative in the IRGC, said that it is natural for Iran to utilize all means at its disposal to combat the oil embargo, one of which is the closure of the Strait of Hormuz.[37] In an interview with Iranian radio, Majlis National Security Committee member Esmail Kothari threatened that Iran would close the Strait of Hormuz if unable to export oil.[38]

With the implementation of the oil embargo, an initiative was proposed in the Majlis calling on the regime to respond by closing the strait.[39] However, many said that closing the strait was not feasible and/or not to Iran's advantage. National Security Committee member Naqavi Hosseini said that, even though Tehran could easily close the strait, a decision on this matter requires comprehensive review.[40] In an interview with the newspaper Etemaad, he added that a decision to this effect exceeds the authority of the Majlis, and should be taken by the regime leaders.[41]

Majlis member Esmail Jalili implied that the Majlis initiative is only meant to raise the price of oil in response to the oil embargo on Iran. According to him, the initiative is positive because it is a "soft" Iranian response to the psychological warfare against it, which "raises the price that the enemy must pay for leveling sanctions against Iran."[42]

Majlis member Heshmatollah Falahatpisheh, who is known for his militant statements, claimed that the Majlis initiative to close the Strait of Hormuz is dangerous and impulsive, since the closure would give Iran's enemies an excuse to launch a military campaign against it, backed by UN regulations; pave the path to more sanctions; and strengthen Israel's claim that Iran must be attacked.[43]

Foreign Minister Ali Akbar Salehi tried to downplay Iran's threat to close the strait, by describing the possibility as merely hypothetical. He said some had considered this possibility in case Iran was denied access to the Persian Gulf, but that he did not think such a situation would ever occur.[44]

Iranian Chief of Staff Hassan Firouzabadi said that the Majlis initiative reflects the will of the people,[45] but that Iran would not close the strait unless it perceived its interests to be in danger.[46] On July 15, Firouzabadi said: "We have no intention of closing the Strait of Hormuz at this time, but we have prepared plans for it."[47]

Majlis presidential committee member Alireza Mandi Safidan also expressed reservations regarding the move and said that Iran would not hasten to close the strait: "Closing the Strait of Hormuz would be Iran's last step in response to the oil sanctions... If certain countries sell oil unjustly with the support of the world's arrogant superpowers, Iran has levers other than closing the Strait of Hormuz to cause the West to regret [it], and it will undoubtedly use them."[48]

The Tabnak website, which is close to Expediency Council Chairman Mohsen Rezai, estimated that the Majlis initiative would not bring about a closure of the Strait of Hormuz since "officially, Iran is not at war."[49]

Finding Alternatives Routes For Exporting Oil

With the implementation of the oil embargo, the regime began taking measures to bypass it, such as establishing private consortiums to sell its oil, finding alternative clients, and selling the oil through other countries.[50]

Selling Oil Through A Private Consortium

In early July, the head of the Iranian Oil Exporters Union, Hassan Khosrojerdi, announced the establishment of three private oil exporting consortiums to assist the regime in bypassing the sanctions and selling oil to the West.[51] Iranian TV reported that 30% of Iranian oil exports would be sold by the private sector.[52]

Iranian_oil_tanker
Iranian oil tanker.[53]

Selling Oil Through Other Countries

Majlis Energy Committee Deputy Chairman Ali Marvi told the Mehr news agency that Iran plans to bypass the sanctions by shipping its oil under foreign flags. According to Marvi, several countries have agreed to rent their ships to Iran.[54]

Finding Alternative Clients

Regime officials and mouthpieces claimed that Iran would find new clients to replace their Western clients. Oil Minister Rostam Qasemi said that Iran was preparing to sign new contracts with clients other than the EU.[55] Majlis member Abed Fattahi said that Iran would not succumb to the sanctions since it enjoys "a totally stable economy," as well as effective diplomacy that enables it to find new clients to replace the West.[56] Mohsen Qamsari, an official at the National Iranian Oil Company, said that Iran has signed a contract with Kenya to export 80,000 barrels a day to this country. However, on July 4, 2012, Kenya announced it had cancelled the deal following U.S. threats to level sanctions against it.[57] Qamsari added that Iran is in contact with other African countries and will soon sign agreements with Zimbabwe and Tajikistan.[58] Columnist Hassan Hanizadeh, who is close to regime circles, claimed that the oil embargo would be difficult for Iran, but would not stand in its way. He explained that Iran has detailed plans to find alternative clients, especially in East Asia, and predicted that the sanctions would harm Europe more than Iran since most of Europe's refineries can only process Iranian oil.[59]

In an interview with the ILNA news agency on July 4, 2021, former oil minister Kazem Vaziri Hamaneh estimated that it would not be difficult for Iran to find alternative clients, and explained that selling oil can also be done "by mediators." He said that the use of mediators might raise the sale costs and decrease Iran's profit margins, but that "the decrease [in revenue] is not a high price to pay for our resolute stand against bullying and pressure."[60]

*A. Savyon is Director of the Iranian Media Project; Y. Mansharof is a Research Fellow at MEMRI.

© 1998-2012, The Middle East Media Research Institute All Rights Reserved.

Endnotes:

[1] Foreign Ministry spokesman Ramin Mehmanparast said that "in the long run, the E.U. countries will regret [the sanctions] because they will run into oil supply problems," and added that the oil embargo was an attempt by the U.S. to compete with its European rivals on the pretext of harming Iran. Yjc.ir, July 8, 2012. Esmail Kothari, a member of the Majlis National Security Committee, said that Europe would find it difficult to endure the embargo while in the throes of the worst financial crisis since the end of the Second World War, and that it was dependent on Iranian oil. Qods (Iran), July 1, 2012.

[2] See MEMRI reports Inquiry & Analysis Series No. 838, "Ahead of the Baghdad Nuclear Talks Between Iran And The 5+1 – An Assessment," May 21, 2012, http://www.memri.org/report/en/0/0/0/0/0/0/6392.htm; MEMRI Inquiry & Analysis Series No. 852, "Tehran's Response To The Intensification Of Sanctions: A Determined Stance On The Nuclear Issue, Controlled Threat In 'Great Prophet 7' Missile Exercise, Threats Of Terrorism," July 3, 2012, http://www.memri.org/report/en/0/0/0/0/0/0/6492.htm.

[3] Though experts assess that oil exports provide some 80% of Iran's export revenues, Iranian President Mahmoud Ahmadinejad claimed recently that it accounts for less than 10% of the revenues, and called to eliminate even this dependency and thereby neutralize the weapon of the oil embargo. Fars (Iran), July 3, 2012. Basij Commander Mohammed Reza Naqdi said that the oil embargo would enable Iran to build an economy not dependent on oil: "All the economic experts say the solution is an economy not based on oil, so we should take advantage of the great opportunity provided by the embargo in order to implement this and march [our] economy forward." Fars (Iran), July 11, 2012. Iranian Supreme Leader Ali Khamenei said that the sanctions would not stand in Tehran's way. Asr-e Iran (Iran), July 11, 2012.

[4] IRIB (Iran), July 7, 2012.

[5] Hawzahnews.com (Iran), July 15, 2012.

[6] Digarban.com, July 3, 2012. The Broadcasting Authority was later compelled to remove the poll results from its website.

[7] Yjc.ir, July 11, 2012.

[8] Khabaronline.com, July 11, 2012.

[9] Fardanews.com (Iran), July 7, 2012.

[10] www.digraban.com, July 3, 2012.

[11] www.digraban.com, July 4, 2012.

[12] Snn.ir, July 15, 2012.

[13] Reuters, July 11, 2012. Abdallah Nouri, a prominent member of the reformist movement, said it was wrong to sacrifice all of Iran's interests to the nuclear program, and warned of serious damage to the Iranian economy, owing to its dependence on oil revenues. He called on the Iranian public to join hands in rescuing the country and saving it from crisis. Roozonline.com, July 11, 2012.

[14] Javan (Iran), July 4, 2012.

[15] Ilna.ir, July 4, 2012.

[16] www.jamnews.ir, July 3, 2012.

[17] Fars (Iran), June 30, 2012.

[18] Fars, Irib.ir, Press TV (Iran), June 24, 2012; lenziran.com, June 24, 2012.

[19] Press TV (Iran), July 3, 2012.

[20] Sepahnews.ir, June 29, 2012.

[21] Press TV (Iran), June 29, 2012.

[22] Yjc.ir, June 27, 2012.

[23] Kayhan (Iran), July 11, 2012

[24] Sobh-e Sadegh (Iran), July 2, 2012.

[25] Yjc.ir, July 11, 2012.  For more on Iranian threats of missile strikes against U.S. watercraft, see http://www.memri.org/report/en/0/0/0/0/0/0/6526.htm.

[26] Press TV (Iran), July 3, 2012.

[27] www.yjc.ir, July 11, 2012.

[28] Press TV (Iran), June 23, 2012.

[29] Press TV (Iran), July 1, 2012.

[30] He said further that, with King 'Abdallah on his death bed, Saudi Arabia is currently weak and there are disputes among his heirs. It should be noted that Fallahian is wanted by INTERPOL for his suspected involvement in the bombing of the Jewish community building in Buenos Aires, Argentina in 1994. Mehr (Iran),  July 7, 2012.

[31] Press TV (Iran), June 29, 2012.

[32] www.yjc.ir, July 15, 2012.

[33] Iribnews.ir, June 19, 2012.

[34] ISNA (Iran), June 25, 2012.

[35] Kayhan (Iran), July 2, 2012.

[36] Al-'Alam TV (Iran), July 1, 2012.

[37] Yjc.ir, July 11, 2012.

[38] Radiogoftogoo.ir, July 7, 2012.

[39] Bultannews.com, July 1, 2012.

[40] Asr-e Iran (Iran), July 3, 2012.

[41] Etemaad (Iran), July 4, 2012.

[42] Mehr (Iran), July 4, 2012.

[43] Khabaronline.ir, July 6, 2012.

[44] Khabaronline.ir, July 6, 2012.

[45] Foreign Ministry spokesman Ramin Mehmanparast made a similar remark. ISNA (Iran), July 3, 2012.

[46] ISNA (Iran), July 7, 2012.

[47] IRNA (Iran), July 15, 2012.

[48] Icana.ir, June 23, 2012.

[49] Tabnak (Iran), July 3, 2012.

[50] Majlis member Abdul Reza Mesri also called to impose a tax on ships passing through the Strait of Hormuz, claiming it was Iran's legal right to do so. Yjc.ir, July 9, 2012.  Kayhan reported on July 11 that more than 60 Majlis members agreed to the taxation plan.

[51] Fars (Iran), July 9, 2012.

[52] Lenziran.com, July 9, 2012.

[53] Press TV (Iran), January 28, 2011.

[54] Mehr (Iran), 9 july 2012.

[55] Javan (Iran), July 2, 2012.

[56] Press TV (Iran), July 5, 2012.

[57] Washingtontimes.com, July 4, 2012.

[58] Mehr (Iran), July 4, 2012.

[59] Yjc.ir, July 2, 2012.

[60] ILNA (Iran), July 4, 2012.

 

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