US-Iran Analysis: Squeezing Tehran into an Agreement?

We open this morning, as people in Tehran and other cities go through their imposed 48-hour "holiday, with a snap analysis on the politics behind Iran's battle with air pollution.

But that's not the only possibility of choking to consider today. Amidst latest reports of current and future inflation --- see yesterday's updates --- US officials are pushing the line that sanctions are constricting Iran. Stuart Levey, the Treasury Department's Undersecretary for Terrorism and Financial Intelligence, told Congressmen that Washington had "made significant progress" on a strategy pressuring Iran to fulfill obligations over its nuclear programme.

Levey claimed, "What we are seeing thus far is very dramatic. Even banks that had previously been willing to do business with designated Iranian banks are now reversing course and cutting ties with Iran altogether." Tehran had been "relegated to the margins of the international financial system ...  finding it increasingly difficult to access the large-scale, sophisticated financial services necessary to run a modern economy efficiently".

Levey added that the economic difficulties were feeding political tensions with "internal Iranian criticism and finger-pointing" over who is to blame for not anticipating the effects of the sanctions.

Levey's performance has to be recognised as an advance act for the talks on nuclear issues between Iran and the 5+1 Powers (US, UK, France, Germany, China, Russia), resuming next Monday in Geneva after a 13-month break. 

And as Gary Sick and Farideh Farhi have noted in analyses on EA in the last 48 hours, all this is on the winding path of US strategy from the start of the Obama Administration to now: hold out the prospect of reconciliation through talks by putting on the squeeze of economic pressure. 

Undersecretary of State William Burns told the Congressional committee, "We will show what's possible if Iran meets its international obligations and adheres to the same responsibilities that apply to other nations. We will intensify the cost of continued noncompliance and show Iran the pursuit of a nuclear weapons program will make it less secure, not more secure." 

Nearby, at the US Institute of Peace, the National Security Council's Dennis Ross --- the man whom many praise/blame for the American approach --- was showing two faces in his summary of the political situation . On the one hand, he was being the professional diplomat: “I think the most important thing is that we want these negotiations to get underway. The expectation should not be that you go into the meeting and everything gets resolved.”

And on the other, he was giving the warning --- agree or life could get worse: 

There’s no doubt the impact of the sanctions is being felt What it all adds up to is something pretty clear: The pressure on Iran is starting to grow.

Iran has the possibility to be (in the international community). I hope it will take the chance because if not it will be squeezed more.