The Iran sanctions are crippling. They might work, but not in the way that you think.

Because Iran's economy was already badly mismanaged, it's been tough at times to discern when Tehran is suffering because of the "crippling" economic sanctions or just rank stupidity. The New York Times' Thomas Erdbrink has been reporting the hell out of the Iranian economy, however, and so we can be pretty sure that the combined effect of the sanctions -- with the EU oil embargo kicking in the first of this month -- are really starting to bite. When Mahmoud Ahmadinejad goes from mocking the sanctions to stating publicly that, "the sanctions imposed on our country are the most severe and strictest sanctions ever imposed on a country," yeah, things have changed.

How bad is the current situation for Iran? They are literally running out of places to store their crude oil:

Iran, faced with increasingly stringent economic sanctions imposed by the international community to force it to abandon any ambitions to develop nuclear weapons, has been reluctant to reduce its oil production, fearing that doing so could damage its wells. But Iran has insufficient space to store the crude it cannot sell. So while it furiously works to build storage capacity on shore, it has turned to mothballing at sea....

International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran’s sales should drop even more with the European embargo that went into effect on Sunday....

The drop in crude sales has hit Tehran with multiple challenges. Besides the financial impact, Iran has to figure out what to do with all the oil it continues to produce. Iran is pumping about 2.8 million barrels a day — already down about one million barrels daily since the start of the year. But it is exporting only an estimated 1.6 to 1.8 million barrels a day.

The unsold crude is being stored in what has been estimated to be two-thirds of the Iranian tanker fleet. Most of the ships are sailing in circles around the Persian Gulf as Iran tries to sell the mostly heavy crude at bargain-basement prices.

International oil experts estimate that Iran is now warehousing as much as 40 million barrels — roughly two weeks of production — on the tankers. An additional 10 million barrels are in storage on shore.

So, even if Iran is somehow able to sell its oil, it will take a huge hit in expected revenue. Clearly, these sanctions are pretty crippling.

I bring this up because, as I've written here, I'm somewhat dubious about whether any sanctions against Iran will work in the sense of "change Iran's mind about its nuclear program." Even though there is room for a deal, the expectations of future conflict between the current Iranian regime and the West are so high that getting to that deal is going to involve significant amounts of labor.

These sanctions are sufficiently punishing, however, that they suggest a new status quo, which is to keep them in place as a containment shell while the Iranian economy slowly implodes. Unless the global economy experiences a significant rebound -- hah! -- there is no reason why all non-Iranian parties can't continue with the status quo for quite some time. Even if the Iranian regime persists, its power and influence in the region will continue to wane.

The obvious objection to this is that Iran develops a nuclear weapon and then uses it, but for a regime that wants to survive above all else, I seriously doubt the "use" part kicks in.

This leads to my question to readers: Is the status quo sustainable?

Daniel W. Drezner

The real American exceptionalism

On this Independence Day, it's worth considering whether there really is anything to this notion of "American exceptionalism."  Realists, for example, like to argue that the rigors of the international system render differences in domestic institutions meaningless.  Liberals genuinely believe that democracies do foreign policy differently.  But has the United States practiced a particularly distinctive set of foreign or domestic policies since its independence? 

Given that it was signed on this day 236 years ago, perhaps it's worth perusing the Declaration of Independence to see if there was anything particularly unique about it.  Some of the better-known passages were not actually all that new.  The whole "life, liberty and the pursuit of happiness" was a mild modification of an old John Locke passage, for example.  Better-written, perhaps, but not uniquely American.

Looking through the list of greivances against the British crown, there is one particularly striking and unusual dimension to the Declaration of Independence.  Boiled down, a healthy fraction of the colonists' compliaint are targeted at British mercantilism.  In essence, the American authors of the Declaration were not too keen on being violently or economically cut off from commerce with the rest of the world.  Consider this list of King George III's offenses: 

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands....

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power....

[C]utting off our Trade with all parts of the world....

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

It was the American desire to allow future Americans to migrate to these shores, and to truck, barter, and exchange with everyone else, that stands out this year when I read the Declaration of Independence.  Which is something to think about when one major party candidate for president demagogues immigration and the other one demagogues trade