December 7th, 2012
07:17 AM GMT
(CNN) – Economic sanctions have effects, says an expert at JohnsHopkinsUniversity, but not all may be intended.
"Sanctions historically are quite counterproductive in the sense that if you impose sanctions on your enemy, it tends to strengthen your enemy," Steve Hanke told CNN's John Defterios.
In Iran - where oil exports provide about 70% of government revenues according to the Congressional Research Service - ongoing sanctions that bar the export of oil are hurting its economy.
In the past year, Iranian crude sales have dropped 60% while the value of the rial has fallen to near-historic lows. Since 2010, the currency has dropped nearly 24% against the U.S. dollar. At the same time, food prices for everything from meat for kebabs to yogurt have surged.
Iran has maintained its nuclear program is for peaceful energy purposes yet only last month the International Atomic Energy Agency released a report saying Iran can now readily convert its uranium stockpiles to a weapons-grade level.
Hanke, an economics professor and expert on sanctions, says the economic restrictions on Iran could be dangerous for the global oil trade and threatens safe passage through the Strait of Hormuz, a narrow shipping lane in the Persian Gulf.
"If you squeeze and squeeze and you don't allow the Iranians to sell any oil, then what do they have to lose by shutting the Strait of Hormuz down? And if they do that, that's 35% of all the world's oil that comes through the strait and 20% of the liquefied natural gas in the world," Hanke says.
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