Escalation of Iran-West conflict

The escalation of the conflict between Western countries and Iran over the Islamic Republic's nuclear program has already become obvious. It may seem that Iran is taking some steps towards a peace settlement of the conflict. For instance, the country has welcomed Russia's proposal to adopt a step-by-step approach. However, it's quite clear that this initiative won't be successful. This means that the conflict is far from being resolved.

Now Western countries prefer to increase economic pressure on Iran rather than to start a military operation. On 31 December 2011, US President Barack Obama signed a document prohibiting all US companies from cooperating with the Iranian National Bank. The measure caused a 12 per cent devaluation of the Iranian currency. Another measure that will strike the Iranian economy is an oil embargo by the EU. It has been reported recently that the EU countries have agreed to impose an embargo on Iranian oil. The only question is when the measure will be taken.

Iran says the country's economy won't be endangered after further sanctions will be imposed. The EU is not the only buyer of Iranian oil. India, Turkey and China all buy Iranian oil and Iran believes that it will be able to increase oil deliveries to these countries so that there will be no need to cut oil production. Iran also threatens that oil prices will rise dramatically in case of an embargo on Iranian oil. In addition to all that, Iran can blockade the Strait of Hormuz, strategically important for oil traffic.

However, Claudia Kempfert from the German Institute for Economic Research (DIW Berlin) believes that a blockade of the Strait of Hormuz won't be a catastrophe for the EU economy, as there are many alternative routes and oil producers.

Another thing is that Iran will place itself in a very risky position if dares to blockade the Hormuz Strait.


Orkhan Sattarov, head of VK's European office