Sanctions have not been effective at changing Iran’s behavior
Reviewing the impact of economic sanctions on Iran, analysts have concluded while they did have an effect on their overall economic output, the ruling elite were shielded for the most part from the economic costs and were therefore not compelled to change their behavior or policies.
Quicktabs: Arguments
Although unsuccessful in stopping terrorism, the range of U.S. sanctions did hurt Iran considerably. Financial pressure, in particular Washington's successful efforts to block IMF and World Bank funding to Iran, made Iran's debt crisis more debilitating. Until the 1998 waiver for Total, ILSA also discouraged foreign investment, which along with other sanctions delayed the development of Iran's dilapidated oil infrastructure. Meghan O'Sullivan, however, contends that sanctions are only a small part of the explanation for Iran's economic morass. She notes that the plunge in the price of oil (in the 1980s and 1990s), along with the war with Iraq, and political mismanagement would have led to a crisis in any event.Although the economic impact of sanctions on Iran was damaging, it did not affect the political orientation of the regime, particularly with regard to terrorism. Iran did shift its terrorism away from Europe and the Gulf and toward Israel, but this shift did not advance, and arguably set back, overall U.S. objectives. Moreover, the sanctions increased Iran's hostility toward the United States, enabling the regime to cite sanctions as "proof" that Washington sought to crush the Islamic revolution.
Escalating international sanctions may help the Iranian regime, including an ever-more-powerful Iran Revolutionary Guard Corps (IRGC), to rally public support for the government by portraying sanctions as U.S.-led aggression, even “economic warfare.”47 Iran’s leaders used international sanctions to encourage voter turnout in the parliamentary elections of March 2012, claiming that Iranian citizens had a duty to show their solidarity at a time of heightened international threat. After the elections, the regime hailed a purported turn- out of nearly 65%, calling it evidence of public support for Iran’s defiance of international pressure.48 (Other explanations for a high turnout are also possible, including public displeasure with the regime’s domestic policies.)
According to some analysts, Supreme Leader Ali Khamenei believes that overturning the Islamic revolution of 1979 is the true intent of the United States. Regime propaganda claims that sanctions are aimed at regime change, not at pressuring Iran to negotiate on nuclear and other issues. The longer sanctions go on, the harder it becomes for anyone in power to tell a different story.
A fourth option, economic sanctions, has been pursued for almost three decades. Since the 1979 Islamic Revolution, the United States has imposed different types of economic sanctions on Iran. After long and complicated negotiations, the United Nations Security Council unanimously adopted Resolution 1737 in December 2006. The resolution imposed sanctions that targeted ten Iranian organizations or companies and twelve individuals associated with Tehran’s nuclear and ballistic missile programs. In September 2006, the United States banned dollar transactions with Bank Saderat, Iran’s largest commercial bank. And in January 2007, the U.S. Treasury imposed sanctions against Sepah, Iran’s oldest bank. Economic sanctions, however, have to overcome two main hurdles. Given Iran’s substantial hydrocarbon resources and its large population (approximately seventy million), several European and Asian countries see Iran as an attractive trade and financial partner. Furthermore, economic sanctions could hurt ordinary Iranians, the same people whose support Washington says it seeks against “the ruling elite.”
Proponents of sanctions have argued that as sanctions cause Iran’s oil revenues to decline and disrupt its trade with neighboring states, Iran may be constrained in its ability to interfere in or influence states such as Iraq, Afghanistan, Syria, Lebanon, or the Persian Gulf countries. With diminished revenues and currency reserves, the United States and its allies hope that Iran may have to become more parsimonious in its financial support to movements such as Hezbollah. In addition, sanctions are changing the region’s military balance in ways that do not favor Iran. And as sanctions reduce Iran’s oil exports, in the short to medium term, Iran’s influence as a global energy player is diminishing somewhat.
So far, at least in some respects, sanctions do not seem to have limited Iran’s ability to exert its influence in the region. Iran continues to provide support, including money and weapons, to Lebanese Hezbollah, Shiite militias in Iraq, and militants in Afghanistan.17 Iran apparently has sent members of its Islamic Revolutionary Guard Corps (IRGC) to advise and even fight alongside the government of Bashar Al Assad in Syria, against his domestic opposition.18 To some extent, Iran’s influence and strength in the region and the allegiance Iran enjoys from some violent non-state groups depend, not on financial realities, but rather on geographical realities and cultural, religious, historic, and ideological ties.
Recent reports also indicate that as larger, more established banks have scaled down their business with Iran, smaller, second-tier entities have stepped in. As major European financial institutions cut off ties to Iran, for example, banks in Pakistan and elsewhere are taking on this business. The difficulty for the United States is that these types of banks are less likely to respond to the general warnings issued by the UN or FATF and pay little attention to veiled U.S. threats. They tend to be less concerned about reputational risk than the major players, and the possibility of being cut off from the U.S. market is largely irrelevant from their perspective, as they do not do business in the United States. A similar trend may be taking place with other types of companies. Although many major European companies may be reluctant to sign new contracts with Iran in this current environment, Norsk Hydro ASA, a Norwegian firm, won a $100 million deal to develop an oil field in Iran in September 2006. A company spokesperson noted that although the United States is “not happy that we’re there,” the deal was highly profitable.
With respect to Iran’s conventional military capabilities, sanctions might have eroded those aspects of Iran’s conventional capabilities that are most dependent on foreign supplies. Resolution 1929 of June 2010 prohibited the sale to Iran of major combat systems, and there have been no reports of sales to Iran of tanks or combat aircraft since then. Iran’s arsenal of these systems are aging and a failure to modernize likely reduces Iran’s ability to project power. As an example, in early December 2014, Iran used 40 year-old aircraft (U.S.-supplied F-4 jets) to strike Islamic State targets in Iraq, near the Iranian border. Russia’s apparent decision in April 2015 to proceed with delivery of the S-300 air defense system could help modernize Iran’s air defense system to the point where these systems pose new threats to aircraft flown by U.S. or other air forces.
On the other hand, Iran’s indigenous arms industry has grown over the past two decades, partly mitigating the limited foreign supplies of weaponry. Iran is able to produce some advanced conventional weaponry indigenously, including short range ballistic and cruise missiles. In addition, Iran might be acquiring some systems, such as smaller ships and small submarines, from foreign suppliers such as North Korea that do not abide by U.N. restrictions.61
As you could probably guess, Iran is one of the most sanctioned countries in the world. And it has gone through this and kind of limped along. But for the longest time, until President Clinton came along, Iranian refined products were coming into the United States. U.S. oil companies and others were bringing Iranian crude into the Caribbean islands, refining it, and then bringing it into the United States. And so we weren't really serious. Where we started getting very serious was in 1996, with the Iran Libya Sanctions Act [later modified to the Iran Sanctions Act, or ISA]. Then we started on oil, which really didn't do much, and we started on all kinds of exports to Iran--everything was basically banned. But Iran always found a loophole. [Banned products] could go through third countries like Dubai and Canada. Iranian vegetables, canned vegetables, lots used to come in, but most importantly, there was a demand for oil. And Iran could always sell its oil.
Another question is whether sanctions have weakened Iran’s ability to accomplish its foreign policy objectives. To date, neither sanctions nor oil prices that have fallen nearly 50% since June 2014 appear to have materially reduced Iran’s ability to arm militant movements in the Middle East and to provide military equipment and advisers to the embattled governments of Syria and Iraqi. In December 2014, one of Iran’s Vice Presidents stated that Iran’s economic support for Syria would continue uninterrupted despite the fall in oil prices since June 2014.62 Iran reportedly has continued to export arms to the Shiite rebel Houthi faction in Yemen and to militant Palestinian Islamist factions, and has sought to supply arms to radical Shiite factions in Bahrain. Iran’s assistance might have helped the Houthis expand their control of Yemen’s capital, Sanaa, in January 2015 and force the removal of President Abd Rabbu Mansur Al Hadi. Iran’s arms exports contravene Resolution 1747.63
Whenever you impose sanctions on a country and you want to change a policy, it is much more likely to succeed if the population of that country is also against that government policy, in this case nuclear enrichment. But the people of Iran are not against that. So that makes it very, very difficult. Namely, the people of Iran are not telling the government to abandon enrichment. They actually approve of enrichment. And so in that, it makes it more difficult to squeeze Iran.
As Secretary Kerry explained in front of the Senate Foreign Relations Committee, sanctions did not stop Iran from advancing its uranium enrichment program. In fact, Iran’s number of centrifuges increased from a few hundred in 2006 to over 18,000 by 2014, and some of the largest increases occurred when Iran was under under the heaviest sanctions. In reality, it was the change in the balance of power in Iran’s political system, resulting in the election of president Hasan Rouhani, that brought Tehran to the negotiating table. This nuance is important: imposing coercive economic measures (i.e., sanctions) can weaken political will in the target country, but does not necessarily force change. To be sure, history is replete with examples. Some have attributed the U.S. anti-apartheid sanctions against South Africa, which forced the country to become more inward-looking, as a contributing factor in its decision to build seven nuclear weapons and invest in developing an advanced industrial military capacity. Comprehensive sanctions against Iraq in the 1990s helped Saddam Hussein shore-up political power by exploiting sanctions, and divert revenues from the oil-for-food program into weapons programs.
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Trita Parsi questions the assumptions that underly the debate about the nuclear deal with Iran, specifically the idea that it was sanctions and pressure that brought Iran to the table finding instead that "the negotiations took off because the pressure path was leading to a dead end— a war neither side wanted."
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