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
First, it is unclear whether any escalation of sanctions could bring the regime to its knees in time to prevent Iran from achiev- ing a breakout capability. Iran’s apparent willingness to negotiate under pressure is not, in and of itself, evidence that more pressure will produce total surrender. Iran’s economy is in dire straits, but the country does not appear to be facing imminent economic collapse. Khamenei and the Revolutionary Guard also seem to believe that the Islamic Republic weathered far worse during the Iran-Iraq War, an eight-year conflict that killed hundreds of thousands of Iranians and produced over half a trillion dollars in economic losses before Iran agreed to a cease-fire. Even if Washington goes forward with additional sanctions, economic conditions are not likely to produce enough existential angst among Iranian leaders, gener- ate mass unrest, or otherwise implode the regime before Iran achieves a nuclear breakout capability. And even if they did lead to regime change, it still might not prove sufficient to force a nuclear surrender. After all, the imprisoned leaders of the Green Movement and Iranian secularists opposed to the Islamic Republic, as well as a significant majority of the Iranian people, also support Iran’s declared right to enrichment.
The sanctions, however, are not solely responsible for Iran’s change in attitude. Just as important has been the increasing anger of the Iranian people at the deteriorating economic situation there, caused at least as much by the incoherent populist policies of the Ahmadinejad government as by the sanctions. A cleverer regime could have avoided the brunt of Iranian anger, turning it against the United States. But Tehran has not been able to convince the population that it should be enraged at anyone other than Iran’s own hard-liners, with their unhelpful economic policies and nu- clear stance. These days, Iranians’ first priority is fixing the econ- omy. And in that regard, Iranians have shown that they are not willing to continue paying the heavy price—the foregone oil reve- nue, the inflation, the unemployment—for the once vaunted nuclear program. In second place is restoring relations with the outside world, which means reversing isolationist policies such as restric- tions on the Internet and satellite television. Even Supreme Leader Ali Khamenei, a longtime proponent of resistance rather than com- promise, recently spoke about the need for “heroic flexibility.”
As an instrument of influence, economic sanctions seek to change the calculus of Iranian decisionmakers by raising the costs of contin- ued defiance of international demands. Although the mechanism is an economic one—the economic pain of sanctions is the coercive instru- ment—the ultimate effect must be political, as policy change can only be achieved when economic restrictions create the appropriate political pressure to influence the decisionmaking process.17
This distinction is critical, because the economic hardship cre- ated by sanctions may in fact not result in political pressure for positive change. Instead, sanctions can have a perverse political effect. They can strengthen the hand of elites that oppose compromise, rally public support for continued defiance, and undermine the very groups that most support the policy changes the sanctions are intended to produce. Sanctions also can trigger effective efforts to adapt by shifting trade patterns or diverting finances, or can even provide rents to regime elements by increasing their control over a scarce good, which they can then preferentially dole out to domestic supporters. Overall, economic pain does not always lead to effective political pressure on the regime.
In many ways, Iran is an unlikely candidate for the successful use of sanctions as a coercive tool. Economic sanctions in general are a blunt and uncertain instrument. Even the most optimistic studies suggest that sanctions will usually fail to achieve their desired coercive goals.18 This is particularly the case with authoritarian adversaries. Sanctions have an especially poor track record in matters of “high politics” related to state security. Regime survival will always trump eco- nomic pain, and existing UN sanctions—or any sanctions regime the United States is likely to achieve given existing political realities—are not nearly enough to threaten the current regime’s existence.
Though economic coercion should be attempted if the current round of diplomacy fails, this seems unlikely to work unless it is combined with a new set of incentives. First, it is improbable that a particularly strong international sanctions regime can be organized against Iran. Russia, China, and even many European states fear that the initiation of a strong sanctions policy, blessed by the UN, is the first step on the road to war. Sanctions may not change Iranian behavior, but they will have further committed the international community to do something about Iran's program. Some states also will oppose a strong sanctions policy because they profit from their relationships with Iran, due to its energy resources, or expect to profit even more if they help shield Iran from stern measures. Finally, given tight oil markets and high prices, most states would not support a sanctions regime that embargoed the export of Iranian oil. Second, though Iran is not a wealthy country, it has a relatively wellrounded economy. Aside from its obvious strengths in oil and gas production, Iran is endowed with abundant raw materials and agricultural land, and has a moderately well developed industrial sector. If a sanctions regime did not close off Iran's oil exports, it seems very likely that, with its own endowments and the cash it raises from energy exports, it could weather any plausible sanctions regime.
Advocates of additional sanctions maintain that sanctions forced Iran back to the negotiating table, and that if pressure got them to the table, then more pressure will force them to do accede to more of our demands during the negotiations.
Counter-claim: Skeptics maintain that the reasons for Iran’s return to the bargaining table were more complex than supporters suggest, and that domestic economic mismanagement and Iranian politics played a crucial role.3
Detractors of new sanctions insist that the “if some is good, more is better” logic as dangerously simplistic. Any doctor, for example, would object to the same reasoning if applied to prescription medicine. Medicine administered at a certain dosage can improve the health of a patient, but if that patient turns around and doubles it, they might poison themselves. Imposing new sanctions in the middle of a negotiation, critics claim, will poison the negotiations. As the top intelligence official in the United States told Congress, new sanctions “would undermine the prospects for a successful comprehensive nuclear agreement with Iran.”4
More broadly, a “punishment only” approach is likely to fail. If countries make concessions, as Iran did in the JPOA, responding with additional punishments reduces their incentive to make further concessions for a final agreement.5 In addition, Iran has demonstrated a very high capacity to endure pain. Recent sanctions have imposed large costs on the Iranian economy, but Iran suffered greater economic pain from the sanctions imposed during the Iran–Iraq War and endured more than 200,000 casualties. Sanctions alone will not force Iran to capitulate.
Assessment: Both proponents and opponents are partly right. Sanctions did contribute to Iran returning to the negotiations, though it has to be said that the outcome was not automatic. If the hardline candidate, Saeed Jalili, had won the election, he certainly would not have resumed negotiations or agreed to the JPOA—something he opposed as Iran’s nuclear negotiator and as a presidential candidate. Whether more is better would seem to depend very much on context. Should Iran fail to comply with its obligations under the JPOA or clearly put off indefinitely reaching a final settlement, additional sanctions might be useful, but imposing them in the middle of a negotiation and confidence-building phase does not, on its face, appear to be the right time to do so.
One obvious “opportunity cost” of sanctions is that they exclude U.S. and allied firms from potentially lucrative business opportunities in Iran.70 As global energy companies wind down or pull out of the Iranian energy development market, in order to comply with or win an exemption from the United States’ secondary sanctions,71 they are ceding the field not only to some IRGC firms, but also to firms from China, Vietnam, Belarus, Malaysia, Ukraine, and other countries willing to ignore U.S. sanctions. Iran has welcomed invest- ment from these companies,72 although most deals are said to be in preliminary stages and many of the foreign companies involved are not as technically capable as those that have withdrawn from Iran. China, in particular, stands to benefit by lining up steady supplies of Iranian oil as a result of its investments. China is now Iran’s biggest oil purchaser (although China recently has reduced its oil purchases from Iran, perhaps because of concerns about the reliability of the supply in a time of increasing sanctions), and overall, China is investing $1 billion in Tehran’s infrastructure.73 These economic relationships—some call it the “Asianization” of the Iranian economy—may have lasting negative implications for the economies of Europe, as described below.74
Washington could further use international sanctions to cut Iran's trading access to the global market, particularly for oil exports, to increase pressure on Tehran to accept assertive IAEA inspections and a stoppage in Iran's nuclear fuel cycle efforts, but that course could suffer from numerous pitfalls. Sanctions would have to be sustained for a prolonged period of time before they began to hurt Iran's economy, and after that time, much like the sanctions implemented against Saddam's regime, they would hurt the livelihood of the general populace more than regime elites. As a consequence the United States might undercut its objective of looking to the Iranian population to usher in a political change in Tehran—under the stress of such international sanctions, the population could rally around the regime rather than taking up political actions against it.
Expansion of Iran’s domestic arms industry. The effectiveness of sanctions in reducing Iran’s conventional military power (discussed above, under Benefits) is at least partly undermined by Iran’s increased determination to expand its domestic arms industry. Unable to purchase some armaments from abroad, Iran has been developing survivable and lethal ballistic and cruise missiles, building more small boats to use in the Persian Gulf, and acquiring additional ships and submarines, according to an April 2012 report by the U.S. Department of Defense. Previous Defense Department reports, such as one issued in 2010, were largely disparaging of Iran’s military capabilities. The revised assessment suggests that Iran might have circumvented the Resolution 1929 arms ban, to some extent, by domestic developments in arms building—or that the level of sophistica- tion of its arms industry is increasing despite the ban.58 The result is an elevated threat to U.S. forces in the Persian Gulf.
Even if the parties do succeed in reaching an international agreement, its longevity is questionable, although the very perseverance over time is critical for the success of such actions. Sanctions take time until their effect is felt, especially if the Iranian political echelons endorse continuing the nuclear program. However, the time demanded by sanctions also defers the possibility of a military option and buys Iran time to proceed with its nuclear plans. Moreover, imposing sanctions against the oil sector could be expensive in two ways. First, achieving international cooperation to this end might obligate the United States to compensate other countries for losses they would sustain due to the economic embargo, in order to persuade them to participate – an expensive course for the United States. Second, harming Iranian oil exports is likely to cause another significant rise in oil prices, as Iraqi oil exports have already dropped since the 2003 war. The prohibition of the export of Iranian products is likely to present fewer problems. Still, many governments may avoid this undertaking as well and even try to make a profit from the partial embargo, while Iran is likely to respond with a temporary reduction in oil production.
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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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