Are Sanctions Against Iran Still an Effective Option?

The US implemented a series of new economic and fiscal sanctions against Iran just prior to last week’s presidential election, continuing its current financial tactic of combating Iran’s desire to continue with its nuclear program. However, given the ongoing nuclear efforts, the question must be asked: are economic sanctions the most effective way to change Iran’s policies?

The question is particularly prescient now, just days after the Iranian people elected a new president. Much has been made of the new era since the “moderate cleric” Hasan Rowhani was voted in. However, the term “moderate” is relative, with Rowhani being hailed mostly in comparison to outgoing President Mahmoud Ahmadinejad, whose rhetoric was more extremist and more violent (for example Ahmadinejad is a well-known Holocaust denier).

However, the West must ask itself two important questions before it can begin to hope that its long-standing fight with Iran will come to an end. First, what is the purpose of sanctions and are they effective? Second, what is the current domestic situation in Iran?

Economic sanctions – what are they good for?

Economic sanctions, most commonly in the form of trade barriers and restrictions on financial transactions, place economic and monetary pressure on a country in order to persuade a government to change not only economic but also social or political policies, both domestically and internationally.

The US originally sanctioned Iran in 1979 following the Islamic revolution and then tightened those sanctions in 2006 in response to the country’s nuclear program. Those sanctions increased in recent years, with the US and EU growing increasingly worried about Iran’s ability to start a nuclear war.

Iran claims that its nuclear program is peaceful and is intended for energy purposes, which would benefit the economy. But this message was muddled when international observers realized that Iranian scientists were enriching plutonium past what was needed for energy and entering into the territory of nuclear weapons.

Sanctions failed to persuade Iran to make changes to its nuclear program.  Negotiators are no closer to coming to a solution with Iran than they were one year ago, and many critics believe that a crucial tipping point has already passed. They argue that the US cannot provide relief by removing the sanctions, and that they have gone on so long that the US lost what support it had within Iran.  However, it is important to note that these are the same people who argue that the sanctions are having no effect.  In reality it seems sanctions are having an effect; the question is what type?

Unfortunately, as is common in these types of situations, the regime leaders targeted by the sanctions have remained largely unaffected by them – a fact that the Obama administration hopes to change with its most recent round of sanctions, which includes blacklisting 37 front businesses around the world that are used by people high-up in the Iranian regime to control real estate assets abroad.

For the most part, however, it is the citizens of Iran who are being harmed mainly by the decline of the Iranian currency, an acute shortage of medication, and job losses. Surrounding countries are also feeling the pain – for example, Iraq has lost a large constituency of tourists since the Shiites in Iran can no longer afford to visit religious sites in neighboring Iraq.

While it is only Iran’s financial and oil industries that are sanctioned, the repercussions are wide-spread. Banks worldwide are forbidden from conducting business with Iran, and as a result even humanitarian goods fail to get delivered for fear that companies will be blacklisted for getting payments from banks that conduct business with Iran.

What is the domestic situation in Iran?

There is a sprinkle of hope. What was needed was for the anger of ordinary Iranians to be vitriolic enough to spur a regime change, and it did…to a degree.

However, the excitement over a “moderate” cleric must also be scrutinized and tempered. In Iran, the Supreme Leader Ayotollah Khamenei has ultimate power. As moderate as Rowhani might be, everyone nominated for president had the express permission and acceptance of Khamenei – anyone he, or his conservative party, didn’t want running was forced out of the campaign. Any individual voted in had the support of the most extremist portion of the Iranian government.

As a result, it seems that more than anything the new president provides hope that Iran might become more reformist, but that is all for now.

Much has been made of Rowhani’s previous position as head of Iran’s Atomic Energy Agency since he acted as chief negotiator at a time when the US and Iran had relatively open relations. However, he has said that the time when Iran made the most nuclear advances was when it had good relations with western countries because there was no entity scrutinizing its research – a telling comment.

In addition, he is a close cohort of Khamenei and is unlikely to act in a way that is contrary to the Supreme Leader’s wishes.

Displaced hope in Rowhani could be dangerous. It is clear that for sanctions to be effective, we must have a partner in Iran who agrees to conditions for removing the sanctions. Regardless, it must also be taken into consideration that Rowhani is not as strong a partner as many in the West might hope.

Most telling is Rowhani’s first speech when he came to office, dictating that while he hopes to warm up relations with the US, foreign officials first “need to say that they will never interfere with the domestic affairs of Iran. Nuclear wishes of Iranians need to be recognized by Americans.”

And therein lies the problem: as long as Iranian officials insist on their right to cultivate nuclear weapons (or at least enhance plutonium past what is needed for nuclear energy) America and the EU will see the nation as a very real threat.

In fact, it is clear that Rowhani will have very little power regarding Iran’s foreign policy. While historically the local economy (which is the target of sanctions) is in the hands of the executive branch, the nuclear program, defense, and foreign relations remain under the control of Ayatollah Khamenei and his band of ruling clerics.

The election of Rowhani, the most liberal of the candidates, sends a sign to the leadership of Iran that the population is ready for change. But as long as the decisions about security, diplomacy, and trade are up to the clerics, nothing much will change.

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