31 October, 2007: London, UK -- The big discussion of late has been the U.S. Treasury Department’s decision to place sanctions on the Iranian Revolutionary Guard Corp (IRGC) and three of Iran’s major banks in response to Tehran’s persistent nuclear efforts. The Bush Administration had, for a third time, attempted to go through the United Nations, but this time that road was blocked by China and Russia.

With this the ever-lingering question of a possible U.S. invasion of Iran aside, will these sanctions work?

The answer very much depends on how “success” is defined—specifically whether the intent is political pressure or economic pressure.

Given the IRGC control upwards of one-third of Iran’s economy, officials are hoping that they can tighten the noose around these elements, which are accused of a litany of crimes including supplying weapons to insurgents in Iraq.

Yet, from an economic stand point, few think that the sanctions will have much effect. The Iranian economy has been under the yoke of American sanctions for decades now and trade between the two countries is minimal—less than $250 million last year.

Diplomatically, though, U.S. officials are hoping that these new sanctions will deter other countries from doing business with Iran. While Europe has also been looking to place its own sanctions on Iran, this unilateral action by the U.S. has ruffled some feathers. In the words of one French diplomat, “we prefer to go to the UN.”

However, other countries have been even less eager to follow suit. Why? With energy prices spiralling upwards, countries are rushing to ensure their economies have the fuel that they need.

Both India and Pakistan are continuing with the planned Iran-Pakistan-India pipeline that would transport Iranian oil and gas into one of the world’s fastest-growing economies. Russia has stepped up its support of Iran of late in a bid to curry favour with Tehran, potentially to acquire greater energy deposits in the Caspian Sea. Finally, China is now Iran’s largest trade partner and, to the exasperation of the Bush Administration, trade between the two countries has actually increased in recent months, despite two sets of UN sanctions.

All these facts paint a pretty bleak picture for the U.S. then as its sanctions look set to fail in both weakening its enemies in Iran and in deterring other countries from trading with Tehran.

What about the political situation in Iran itself though? Any weakening in the Iranian economy could result in more criticism for President Mahmoud Ahmadinejad on an issue that has been his political Achilles heel. He has been derided for focusing more on the nuclear issue than on basic economic policies that improve the lives of the Iranian populous. Though he presently has the backing of Ayatollah Ali Khomeni, it is not a given that he will come the next elections.

What do you think? What will the likely effect of sanctions be: Will the international community side with the U.S. or will their own economic interests come up trumps? Will sanctions weaken Mr. Ahmadinejad or give him fodder to attack the U.S.? And, most delicately, what is the next likely step? Send us your thoughts.

Also, I highly recommend reading this interview of Karim Sadjadpour, a scholar at the Carnegie Endowment for International Peace, which gives a great summation of the issues at hand, including why it would be in Russia’s interest to keep this standoff alive.

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Marc C. Partridge is a London Correspondent and regular contributor to the Diplomatic Courier Magazine. His blog is posted on Wednesdays.