Sanctions pose little threat to Iran

A candy merchant in central Tehran put a notice outside his shop just before the recent Persian New Year: "Because of shortages this year, please buy less baklava."

If that was he honestly wanted, the effect was quite the opposite. Women customers mobbed his shop, and a long queue formed outside to buy the sweet pastry.

They kept coming back for days before the New Year festival to get into the queue. Each customer wished to make sure she had enough baklava in the house to offer guests during the Persian equivalent of Christmas.

But it isn't just baklava that has been worrying the Iranian housewife recently. Eggs, milk, salt, meat, fish, washing powder, cooking oil -- practically everything she needs to keep an ordinary household going from day to day -- have been in such short supply over the past year that she jumps to buy up anything the minute she suspects stocks are running out.

One housewife recently heard someone shout in the street below: "They've got vegetable shortening in the corner shop." She threw on her coat and dashed out. Ten minutes later she came back looking very disappointed. "It was all sold out by the time I got there," she said.

The shortages are a manifest result of an economic halt Iran has been experiencing over the past year or so. Imported items the ordinary housewife needs are in short supply because trade has dwindled to near zero, partly as a result of a slowdown of work at the ports. In addition, foreign companies have been reluctant, even without any formal embargo, to do business with a country as economically and politically unstable as Iran.

In fact, economic conditions inside Iran already are so bad that it is difficult to imagine them getting any worse due to sanctions or a blockage imposed by the United States and its allies.

Locally manufactured items are hard to get because production has dropped drastically or halted altogether for three main reasons:

* Raw materials are in short supply or not available -- again as a result of the trade slowdown.

* Owners and directors of factories have fled the country.

* Workers, fired by the new revolutionary spirit, have set up local "workers' councils" that overrule those of the bosses and managers who have remained.

The only real damage US sanctions could do would be to delay the economic recovery President Abolhassan Bani-Sadr has been working on since he was elected a little over two months ago. Apart from that, their impact would be largely symbolic.

President Carter's European allies may go along with him mainly because they have very little to lose anyway, trade with Iran having dropped to almost zero already. Moreover, the contracts they had on development projects before the revolution have been either canceled or suspended indefinitely.

Before joining the economic blockade some European countries would have to weigh carefully the effect this could have on their oil supply positions. Oil is a manyheaded monster. Theoretically, any country that decides it could do without Iran's oil for a few summer months would have to consider what it would do in the never-far-behind winter.

With a $15 billion foreign exchange reserve, Iran probably could sit out an economic boycott of several months. Not all of this reserve money has been trapped in the American freeze. Actually, these massive reserves together with oil revenues are what have kept this country going through its current economic crisis, even without sanctions.

But if Mr. Bani-Sadr is working to free the 50 hostages in the US Embassy, it is not because he fears the economic sanctions Mr. Carter has threatened him with. Sanctions are likely to take months, if not years, to show their effects. Within months, the hostage crisis is expected to have been resolved.

The plain fact is that the Iranian President wishes to see the hostage crisis out of the way for political reasons more than economic. Mr. Bani-Sadr wants to curb the rival political power centers that have sprung up to challenge and weaken the government's authority.

One of the most prominent, and therefore symbolically important, of these centers is the group of militants who have taken over the US Embassy.

Once the student militants are out of the way, this could have a psychological effect on the other power centers, such as the workers' councils.It is important to bring these people into line if the economy is going to pull out of the doldrums.

If anything, economic sanctions by the United States and other Western countries could produce the necessary shock effect to get Iran's workers back to their machines.