Pak financial bodies to be hit by US law on Iran sanctions
Pakistan's financial bodies are set to bear the brunt of the strict US law on Iran sanctions which came into force today, as the country was not granted the necessary waiver extended so far to India and 19 others.
Pakistan along with Afghanistan is not among the 20 countries which, according to Secretary of State Hillary Clinton, have significantly reduced their import of oil from Iran.
The list of the 20 countries which were given the waive, was announced in three phases, the last two of them being China and Singapore.
In addition to China and Singapore, Belgium, Britain, the Czech Republic, France, Germany, Greece, India, Malaysia, Italy, Japan, the Netherlands, Poland, South Africa, South Korea, Spain, Sri Lanka, Taiwan and Turkey have been exempted so far.
US officials did not provide any explanation for not giving the necessary exemption to Pakistan in this regard, in the absence of which Pakistani financial institutions would be majorly impacted by the tough American sanctions on Iran.
"A total of 20 world economies have now qualified for such an exception. Their cumulative actions are a clear demonstration to Iran's government that Iran's continued violation of its international nuclear obligations carries an enormous economic cost," Clinton said in a statement.
According to the International Energy Agency (IEA), Iran's crude oil exports in 2011 were approximately 2.5 million barrels per day, and have dropped to roughly 1.5 million barrels a day, which in real terms means almost USD 8 billion in lost revenues every quarter.
When the EU oil embargo goes into effect on July 1, Iran's leaders will understand even more fully the urgency of the choice they face and the unity of the international community, Clinton said.
Later, a senior administration official said the sanctions on Iran's central bank and oil sector are having a significant effect on the Iranian government and its economy.
"Just yesterday you saw an Iranian official admit that sanctions have led, according to their own estimates, to a 20 to 30 per cent reduction in sales," the official said.
The US, the official said, would continue to implement these sanctions fully to achieve additional reductions. The official said the US would also continue to work with other oil producers to encourage increased production and development of their capacity so as to, again, maximise the impact on the Iranian government and deny the increase in oil prices that could allow them to make up for lost revenue.
"While we will continue to monitor closely developments in the oil markets, including supply, demand, inventories and spare capacity, to assure that the market can continue to accommodate a reduction in purchases from Iran, we have every intention of maintaining these sanctions on Iran, keeping in mind... that we have the EU oil embargo that is coming fully online here, a process that will continue in the coming days, on July 1," the official said on condition of anonymity.
"So the Iranian regime's choice here has been to flout its international obligations, but they are paying an increasingly high price for that choice. And with these steps today and the steps we're prepared to take going forward, the costs are only going to rise further for Iran," he said.
It is in the Iranian interest to take concrete steps to address the international community's concerns and to abide by their international obligations, the official said.
"They have an opportunity to do so through the P5-plus-1 negotiations. They have not yet done that. But we will continue to reiterate to the Iranian government that we need to see concrete actions by them to come in line with their obligations, or else we are going to continue to ratchet up these sanctions," the official said.