UNITED NATIONS, Jan 30 (Reuters) – Two rounds of U.N. sanctions against Iran for refusing to halt sensitive nuclear activities have had an economic and political impact on the Islamic Republic, Britain’s U.N. ambassador said on Wednesday.
Last week Britain and the other four permanent U.N. Security Council members — the United States, France, Russia and China — along with Germany circulated a proposal for a third sanctions resolution against Iran calling for travel bans, asset freezes and vigilance on all banks in Iran.
Iran says the sanctions have not hurt it and has vowed to press ahead with its uranium enrichment program, which can produce fuel for nuclear power plants or weapons.
"The economic effect has been to contribute to a further downturn in Iran’s trade, particularly with Europe, and the readiness of international companies to invest," British ambassador to the United Nations, John Sawers, told reporters.
"It’s made companies, banks for example, consider their exposure and whether it’s worth the reputational risk of being involved with Iran," he said.
As a result, even though Tehran’s oil and gas revenues have brought the country ample cash, President Mahmoud Ahmadinejad and his government have been unable to deliver on promises of economic improvements for ordinary people, Sawers said.
While there are no figures for the precise impact of the sanctions, Iranian unemployment is high at around 10 percent and inflation has hit 19 percent, hurting mostly the poor voters Ahmadinejad courted in the 2005 presidential race.
Tehran says its nuclear ambitions are limited to the peaceful generation of electricity. Western countries believe Iran is amassing the capability to build nuclear weapons and want it to halt enrichment.
The U.N. Security Council has backed the demand for an Iranian enrichment freeze in three resolutions, two of them imposing sanctions against Tehran.
Sawers said there has been a political impact as well.
The unity of the six key players on Iran and the sanctions have "contributed to a pretty fierce debate within Iran about what price they should be willing to pay for pursuing their nuclear ambitions," he said.
Many traditional conservatives have become critics of Ahmadinejad’s policies, in particular his regular speeches berating the West, saying he has isolated Iran when careful diplomacy to resolve the nuclear dispute may have been better.
Diplomats on the Security Council say it will take several weeks to draft a formal third sanctions resolution, which they expect to be approved. They describe the new proposal as a moderate step up from the two previous sanctions resolutions and say the vast majority of council members could back it.
If Tehran continues to enrich uranium even after the new sanctions, the new proposal says the Security Council will eventually "adopt further appropriate measures".