Special Report: Inside the West’s economic war with Iran | Reuters

Neverthless, sanctions are hurting – and this year has been crucial.

The final straw that made oil sanctions possible was a January 2011 diplomatic blow-up in Turkey.

Top envoys from the world’s five most powerful nations and Germany gathered in Istanbul to meet an Iranian delegation. They wanted to know if Iran might take a fresh look at a 15-month-old proposal: Iran would ship out much of its enriched uranium in exchange for fuel for the U.S.-supplied Tehran Research Reactor that produces medical isotopes.

If Tehran agreed, it would give up a type of fuel which, if further refined, could yield fissile material for bombs. In return, the Iranians would get something they wanted – reactor fuel – and, perhaps, a face-saving way to begin wider nuclear negotiations.

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But Iranian negotiators at the Istanbul talks struck an uncompromising stance, and what a senior U.S. official described as a “peremptory” tone. The definitive rejection – after two years of Obama’s efforts to engage the Iranians – allowed Washington to persuade the EU, Russia and China it was time for tougher sanctions.

“They had stiffed us on diplomacy at this point,” said Dennis Ross, a top White House adviser at the time. “They had completely stiffed us.”

Special Report: Inside the West’s economic war with Iran | Reuters