Shares of UK bank Standard Chartered (SCBFF) plunged Tuesday - one day after the New York State Department of Financial Services accused the London-based bank of being involved in laundering money for Iran.
Standard Chartered's stock drops on Iran allegations
In FORTUNE magazine's latest edition, CNN's Erin Burnett discusses why harsh economic sanctions by the U.S. against Iran won't have its intended effect unless nations stop doing business with Iran.
Washington gets tough on Iran (sometimes)
The U.S. and Europe are implementing the toughest sanctions yet on Iran to stop its leaders from developing nuclear weapons. The measures have succeeded in making life harder for regular Iranians; according to Iranian news sources, milk prices are rising daily, and citizens boycotted bakeries and grocery stores in protest in June.
As difficult as sanctions have made life for Iranians, they could be tougher and more effective. That's because the U.S. government, the leader of the international sanctions program, is applying its policies inconsistently. First are the exemptions that the State Department granted to the top three buyers of Iranian oil: China, Japan, and India. If the U.S. really wanted to apply pressure on President Mahmoud Ahmadinejad's nuclear program, it could insist that China, Japan, and India cease all oil imports (oil is the lifeblood of Iran's economy, accounting for 80% of Iranian foreign-exchange earnings - and China alone buys half of Iran's crude exports) and pledge to deny those countries access to U.S. banks if they don't comply. The U.S. already bars Cuba from tapping our financial system, for example, but Havana, unlike Beijing, doesn't own $1.17 trillion of U.S. debt. And so our diplomats praise China, Japan, and India for merely reducing their dependence on Iranian oil imports and look the other way.
I've read all of your columns in Fortune, and while I enjoyed each of them, this one is by far the best. By blending in your travels inside Iran, you give a uniqueness and authenticity to your viewpoint that no other journalist can bring. Very well done.
When you mentioned the effect that sanctions have inside Iran, I couldn't help but reflect on the possible impact tighter sanctions could have on our middle class: oil is sold on the world market and if the US was successful in restricting oil imports to China, Korea and India, the impact of that would be felt globally in higher oil prices-as well as higher prices in the US, which, again, effect the middle class most profoundly. As always, be careful what you wish for.
I think you are probably on the right track: using US trade relations as leverage on companies doing business inside Iran could possibly be MORE effective than restricting the world's supply of oil, with much less downside risk.
I hope you keep with the writing side of your endeavors: you're going to have some great memoirs to write someday...All the Best, TVA.
I'm really not interested in sanctions and whether they will be more effective, I only want to know how many people will go to jail from Standard Chartered and how long the prison sentence will be for aiding the enemy.
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Erin Burnett OutFront airs weeknights at 7 p.m. ET. Designed to showcase Erin's unique style--casual, smart, and confident--OutFront stays ahead of the headlines, delivering a show that's in-depth and informative.
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