By Nader Uskowi
Yesterday’s lack of clarity over a possible ban on refueling Iranian passenger planes in some European and Middle Eastern airports could be the result of uncertainties over the extent of the new US sanctions against Iran. Did a ban on selling gasoline to Iran include the ban on selling jet fuel to Iran Air? Notwithstanding that uncertainty, one thing is becoming clear: the US sanctions will have major effect on gasoline sale to Iran.
Almost all major refineries capable of producing and exporting gasoline are stopping their sale to Iran. Reports from Iran indicate dramatic drop in availability of gasoline in the wholesale market, as much as half the volume of last month. The most likely outcome of such shortage will be as a dramatic rise in gasoline prices. The government-controlled rate is expected to hit 900 tomans per liter ($3 per gallon), with unrestricted prices not unthinkable hitting 1,500 tomans ($5 per gallon). These prices will produce inflationary pressures and above all will create public dismay. Until recently people were paying a fraction of these prices to fill up their cars.
The new US sanctions are also creating problems for the country’s banking system, a serious situation that we will continue monitoring.
I am not arguing that the new US sanctions in themselves will be game changers. Countries can and do adjust to harsh economic conditions. It is argued, however, that the Iranian government needs to take these realities into account in making its final decision on the country’s nuclear program. I believe its resilience to maintain the program intact, even under heavy international pressure, has indeed been shown. The leadership should now base its decision solely on the national interests of Iran. If it is in the country’s interests to end its current economic woes, a compromise in enrichment program is indeed in order. Leaders are expected to make difficult and unpopular decisions and the Iranian leaders need to abandon populist policies and start making very difficult decisions.