European foreign ministers have approved an oil embargo against Iran. The sanctions ban any new oil contracts with Iran, while existing contracts will be honored until July 1st. While this might seem like a good way to way to stall Iran’s nuclear ambitions, it will only serve to unite the Iranian people and worsen the already fragile diplomatic relations the west has with Iran.

The European Union currently buys a significant amount of oil from Iran, about 20% of total exports. Iran’s economy is already suffering, with rising house and food prices. In order to avoid a worsening economic situation, the Iranians will have to find other buyers for 20% of their oil exports. China, Japan, and India are already major buyers of Iranian oil, and it is possible that exports to these countries could increase. If this does happen some of Europe’s major economic competitors will be benefiting from the sanctions while the negative effect on Iran’s economy will be minimized. This is the best outcome.

There is a worse possible outcome, that the sanctions do have a negative impact on the already struggling Iranian economy. The Iranian government can continue making the argument, with some legitimacy, that much of Iran’s economic woes are due to overbearing western economic measures. While it is true that there is an oppressed political opposition in Iran, sanctions serve to unite the country behind the regime the sanctions are aiming to harm.

Relations with Iran are getting measurably worse. In the last six months the UK’s embassy has been stormed, a former U.S. marine has been sentenced to death, a British frigate and American destroyers have moved into the Arabian Gulf, and Iran has confirmed uranium enrichment. What is clear is that past sanctions have not managed to dissuade Iran of its nuclear ambitions or improved diplomatic relations.

Bastiat’s maxim, “When goods don’t cross borders, armies will” is being slowly confirmed in Iran. The best chance the west has in minimizing the threat of a nuclear Iran is to end the economic barriers that prohibit free trade while taking steps to ensure that diplomatic efforts to prevent an Iranian nuclear weapon resume. Unfortunately, government officials in Europe seem incapable of considering either of these to options as legitimate courses of action.