Late last week the EU reached a preliminary agreement to impose an embargo on Iranian oil as part of an ongoing effort by Western nations to impose economic pressure on Tehran to prevent Iran’s uranium enrichment programs from progressing. As the second largest importer of Iranian oil, the EU sanctions could cause serious damage to the Iranian economy which has already been adversely effected by the United State’s ban of dealing financially with Iran’s central bank. Iran has been far from quiet in their response to the proposed sanctions, threatening their willingness to close the Strait of Hormuz, a strategic trade route through which 20% of all oil traded must pass through.
The tension over the Iranian situation is hardly contained to the United States and EU, however, as any disruption with the Strait of Hormuz could have serious implications for the global oil market, which could in turn deteriorate international economic recovery. Also cause for concern is recent efforts by the United States to enlist Japan and China to assist in their economic pressure on Iran. Efforts to gain the assistance of China especially in the embargo has been complicated by recent United States accusations about Chinese currency manipulation, as well as China’s historically self-interested policies in dealing with dubious international regimes. The willingness of the Chinese to assist in the embargo against Iran could have serious implications on the program’s effectiveness, though U.S. accusations of yen deflation and China’s selfish past dealings with regimes such as in the Sudan, does not make their assistance look promising.