Business in the Middle East
Because of Iran’s support for international terrorism and their aggressive actions, sanctions were placed on Iran under the Regan administration. These sanctions were furthered developed in 1995 preventing US firms from involvement in Iran’s petroleum programs (“Iran”, 2006).
These strict sanctions continued until 2000 where some items were exempt include gift items under $100, information and information materials, foodstuff for human consumption, and carpets or other textile floor coverings (“Iran”, 2006).
Currently, Iran is the second highest producer of oil in the world. In 1995, Iran’s oil exports were worth $15 Billion, however with higher prices their oil program produced over $46 Billion in 2005, which builds a stronger economy to the Iranian government, allowing them to invest into weapons and possibly support terrorism (Schott, 2006). Although sanctions may have delayed Iran’s ability to develop such things as nuclear weapons, their nuclear program has been growing strong for over 20 decades with continued advancement (Schott, 2006).
Although sanctions have lead to some non-American companies to defer bids within the country (Schott, 2006), other countries are benefiting from Iran’s oil production with a competitive advantage when no U.S. firms are able to bid on contracts.
Congress needs to weigh out the financial loss through sanctions
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Since there is no visible gain by sanctions, there is no advantage which outweighs the loss to US firms who can exploit the massive oil potential through increased funding and production. Not only would this provide revenues for US firms, but it would also help lower long term oil prices by providing increased production and reduced concerns regarding the stability of the area. These lower prices will greatly help the US economy as a whole in the short and long term.
Iran: What You Need to Know About U.S. Economic Sanctions (2006). U.S. Department of the Treasury, Office of Foreign Assets Control. Retrieved February 9, 2007, from http://www.treas.gov/offices/enforcement/ofac/programs/iran/iran.pdf
Schott, J.J. (2006). Economic Sanctions, Oil, and Iran. Testimony before the Joint Economic Committee, July 25, 2006. Retrieved February 9, 2007, from http://www.iie.com/publications/papers/paper.cfm?ResearchID=649