The Obama administration is pushing for tougher sanctions on Iran to stem the Islamic republic's nuclear ambitions, and advocates of stiff measures note that the mere threat of sanctions has already convinced a few foreign firms to stop trading with the country.
Both the Senate and the House have passed bills that would punish companies that sell refined petroleum products to Iran, and once reconciled the final version of the bill will be sent to the president for signature. On Monday morning, Secretary of State Hillary Clinton told the American Israel Public Affairs Committee that the Obama administration is pressing the United Nations for international "sanctions that will bite."
But anyone who would tout the coercive power of sanctions should remember the story of oil trader and international fugitive Marc Rich, an American who made a fortune off them. Before being pardoned by President Bill Clinton during his last hours in office, Rich earned billions over 16 years selling oil for the Iranian ayatollahs – oil he wasn't allowed to sell, according to U.S. prosecutors – to countries that weren't allowed to buy it.
As Rich himself told me during a series of exclusive interviews, even the taking of 53 American hostages, the event that sparked the U.S. oil embargo in the first place, was no impediment to business.
"It was a political development which did not affect the business," Rich told me. "It was very unpleasant and tragic for the hostages and humiliating for America, but it didn't affect the business."
The embargo and the sanctions that followed the Iranian Revolution of 1979 proved a boon to the man considered the most secretive and powerful oil trader in history, as Rich detailed to me in interviews conducted for my book, "The King of Oil." For the first time ever, Rich publicly acknowledged doing business with the Iranian ayatollahs.
"We performed a service for them," Rich told me. "We bought the oil, we handled the transport, and we sold it. They couldn't do it themselves, so we were able to do it."
American sanctions on Iranian oil began with President Jimmy Carter, who imposed harsh economic punishments on Iran after the November 1979 seizure of the U.S. Embassy in Tehran. Carter froze all Iranian government assets in the U.S. He also banned the import of petroleum products from Iran, and prohibited U.S. citizens from conducting financial transactions with Iran. The Iranians, in turn, canceled all contracts with American oil companies operating in Iran and forbade them from exporting crude oil out of the country.
For Rich, the revolution and the oil embargo were the beginning of a lucrative and unusual business partnership. On the same day that Ayatollah Khomeini returned from his French exile to take power in Iran, one of Rich's closest business partners landed in Tehran to seek contacts in the new government. Soon the anti-American, anti-Israel and anti-Semitic Khomeini regime was in business with the Jewish-American business mogul.
Rich had worked closely with the regime of the hated and recently deposed Shah Reza Pahlavi. The ayatollahs, however, decided to abide by contracts that had been signed by the shah. Iran would become Rich's most important supplier of crude oil for more than a decade and a half. Rich acknowledged to me that he maintained a much more intensive business relationship with Iran than was previously known.