It's true that sanctions have hit some Iranian businesses, especially those that rely on imported parts. Sanctions have also cut sharply into the regime's oil exports, down to about a million barrels a day from 2.25 million a year ago. But while exports are down sharply, revenues are off only 17% since 2010, thanks to higher oil prices. Iran is expected to earn $53 billion in oil revenues in 2012.
That doesn't mean the Iranians can rest easy. Economic forecasting by the Foundation for Defense of Democracies suggests that on current trends Iran could exhaust its foreign-exchange reserves, currently estimated at about $90 billion, by July 2014. The date could probably be moved forward by a massive intensification of sanctions, including an end to the waivers the Obama Administration has been handing out to any country that reduces its consumption of Iranian energy. Tighter money from the Federal Reserve would also go far to reduce commodity inflation, as it did during Paul Volcker's tenure in the early 1980s.
Yet forcing a balance-of-payments crisis on Iran doesn't mean it will abandon its nuclear ambitions. As Mark Dubowitz of the Foundation for Defense of Democracies notes, sanctions on Iraq and South Africa also caused balance-of-payment crises without immediately toppling the regime. Countries don't have the same pain threshold, and the Islamic Republic has shown it's prepared to impose a lot of suffering on its own people to achieve its goals.
There is also a risk that sanctions, instead of slowing Iran's nuclear programs, might accelerate them. The lesson from the nuclear breakouts of Pakistan in 1998 and North Korea in 2006 is that international condemnation for going nuclear is short-lived while the gain in diplomatic leverage is great. Pyongyang was removed from the U.S. list of terrorism sponsors within a couple of years of its first nuclear test in 2006—and by the Bush Administration, no less.
In last week's Vice Presidential debate, Joe Biden insisted the U.S. has plenty of time to deal with the Iranian nuclear threat. The only people who should take comfort in that judgment are Tehran's mullahs.