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This income has helped Iran partly offset a de facto trade embargo imposed by U.S. longshoremen, who have refused to load cargoes on ships headed for Iran. U.S. exports to Iran in 1978 totaled about $3.7 billion a year and included 25% of Iran's food imports and most of the replacement parts for its weapons and capital machinery. Administration officials maintain that the freeze has furthermore deprived Iran of basic imports such as cooking oils, tires and even valves for Tehran's water supply system. Insisted one Administration spokesman: "The way we see it, the Iranians should start to get cold and hungry this time next month."
Quite the contrary, say skeptical U.S. Government economists and Western experts in Tehran. Iran has found more than enough alternative sources of food; for example, the Australian government supports the U.S. on the hostages but has continued its exports of meat and wheat to Iran, which this year will total $140 million. Similarly, Iran is importing eggs from Turkey, poultry from Rumania and rice from Thailand. Tehran is making up for the cutoff of U.S. medicines by buying some 600 pharmaceutical items from Japan, ranging from aspirin to antibiotics. It is importing U.S.-manufactured oil-drilling equipment from Rumania and could obtain spare automobile parts from a General Motors Corp. assembly plant in any third country. True, the shops in Tehran may no longer be able to stock imported items like detergents, disposable diapers and tooth paste, and there are occasional shortages of bread, eggs, meat and other items. But otherwise, there is scarcely any sign in the city of the U.S. economic squeeze.
Even if the Carter Administration could find ways of making sanctions against Iran stick, they would have little effect over the short run. Concludes Harald Malmgren, a respected international economist and consultant in Washington: "The U.S. near term leverage is simply less than it appears. No matter what the U.S. does economically, Iran can make this thing drag on for many more months to come."
The Administration is particularly peeved about the help that the Japanese have been giving Iran. In Paris, Vance provided an earful of complaints to Japanese Foreign Minister Saburo Okita, who was in the city for a meeting of the International Energy Agency. A U.S. official charged that Tokyo has allowed Japanese banks to "go overboard" in helping Iran circumvent the financial problems caused by the assets freeze. In addition, he said, some Japanese trading companies have rushed "with unseemly haste" to buy 21 million bbl. of Iranian oil that had been destined for the U.S. before Carter halted oil imports from Iran last month. The Japanese firms paid exorbitant sums for the oil, up to $45 per bbl., about twice the average OPEC price. Complained another Administration official: "They never quibbled about price, and when Iran said it would no longer take dollars in payment for its oil, the Japanese were all too willing to give them West German marks."