For the past few weeks, Western states have not only imposed sanctions on Iran, but also convinced many Asian countries to do the same.  These sanctions are an economically crippling bargaining technique to pressure Iranian officials into discontinuing their uranium enrichment program, which American and European officials claim to be a nuclear weapons program with malicious intent but Iranian officials claim to peaceful and a national right.  Furthermore, many financial institutions that interact closely with Iran’s central bank have also been targeted.  The assets of Iran’s central bank are currently frozen that are linked to Tehran.

Thus, Iran and its economy never looked shakier than in the past few days.  Paralleling the rising tensions of nuclear weapons have been concerns for the country’s fragile economic state.  The markets’ depravity finally manifested last week when Iran defaulted on its rice payments to India by a staggering $144 million.

India, remaining neutral to the Western sanctions, has been exploring investment opportunities in Iran.  The primary venture proposed is a barter partnership for Iranian oil with Indian wheat, but another speculative bargain includes a petroleum-automotive transaction.  But this tie between the energy, agricultural, and manufacturing industries is sure to be a strained by Iran’s lacking monetary state.

Historically, residual effects of sanctions on the global economy have included shortages, inflation, and debt payment complications.  What are your thoughts on this situation?  What other long-term effects do you predict?

File under

Share this article