Sanctions are convulsing Iran. In the past seven months, the Western turn from targeted sanctions to broader economic warfare has presented the Iranian regime with perhaps its greatest economic challenge since the Iran-Iraq War.
A looming European Union oil embargo, which goes into effect on July 1, along with additional U.S. pressure on Iran's customers to reduce their oil purchases, will make matters worse for Iran's leaders. The situation is already dire: Iran suffers from hyperinflation, stagnant growth, and a crumbling currency. And oil revenues, which constitute 80 percent of Iran's export earnings and half its government budget, have already dropped almost 40 percent, year over year.
Yet, sanctions have so far failed to achieve their intended objective of forcing Iranian Supreme Leader Ali Khamenei and his Islamic Revolutionary Guard Corps (IRGC) to agree to halt their nuclear weapons program. U.S. President Barack Obama and his European counterparts built the sanctions regime to increase their leverage at the negotiating table and cause financial desperation on a scale to match the determination and duplicity of the men who have spent three decades and billions of dollars to develop every component of an Iranian nuclear-tipped missile.
But the painful truth is that Western sanctions have been underwhelming. Three rounds of failed talks in Istanbul, Baghdad, and Moscow have shown that the United States and its allies do not yet have the kind of leverage that could make Khamenei yield and agree to meet Iran's obligations under international law. In spite of cyberattacks and sabotage, the supreme leader has reason to believe that Iranian physicists can construct a nuclear bomb faster than Western countries can undermine his economy.
For sanctions to work, Khamenei must be forced to make a fundamental decision between his nukes and his regime. While Obama and his allies in Europe have made no effort to overturn Khamenei's regime -- notably doing nothing to support the Green Movement in the summer of 2009 -- they have wanted him to think they will.
The best evidence that Khamenei fears what a massive U.S.-led economic offensive could do against his country is the quiet in the streets of Iran. A leader confident that his citizens would rally around the flag against Western sanctions would be busing in hundreds of thousands of Iranians from the towns and villages, where the regime's faithful live, to burn Obama in effigy. Khamenei hasn't done this. Since the summer of 2009, the regime has lived in fear of massive street demonstrations that could easily turn against him and the regime.