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.
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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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The United States has framed international sanctions as an alternative to military action—and many reluctant countries have signed on to the sanctions regime in hopes of avoiding conflict. But to Iranians whose lives are negatively affected by sanctions and who see their country being targeted for increasingly harsh treatment, the international sanctions look like hostile acts. Iranian leaders have claimed that the sanctions regime is a “declaration of war.”54 Some U.S. analysts have suggested that sanctions ought to be understood as part of a “force curve”; in this light, the function of sanctions is to “pre- cede or accompany armed hostility,” not to prevent it.55 Certainly, as suggested earlier in this paper, the United States and other states have chosen to use military force in some other instances when sanctions were perceived to have failed.56
The international sanctions, combined with threats from Israel and a U.S. mili- tary buildup in the Persian Gulf, may have heightened Iran’s readiness for asymmetrical retaliation against United States and allied interests. American intelligence suggests that Iran’s Qods force (the unit of the IRGC that operates outside of Iran’s borders) is already undertaking such action—for example, the purported Iranian plot, revealed by U.S. law enforcement in October 2011, to assassinate the Saudi Ambassador to the United States, and the IRGC’s participation in the Syrian conflict.57 Other contributors to an increased potential for conflict are Iran’s expansion of its arms industry, and threats by Iran to hamper shipping through the Strait of Hormuz.
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Iran was able to resist sanctions for several reasons. First, and most importantly, the costs were manageable, allowing Iran to offset much of the potential damage. Although the United States was a major market for Iranian products, Tehran diversified its trade partners and worked through third countries to reach the United States. Second, Iran'smajor export—oil—is in essence a global commodity, and the cutoff of one market to one supplier has no significant impact on a country's ability to gain the maximize price for its exports. Because Iran's regime depended for legitimacy on Islamic radicalism and Persian nationalism, both of which opposed any perceived kowtowing to Washington, the costs of complying with U.S. pressure were considerable. Iranian leaders risked being branded as puppets of the United States if they gave into U.S. pressure, a particularly heavy charge as the regime came to power in part on a wave of anti-Americanism. The consolidation of conservative power in Iran in recent years, symbolized by the election in June of Mahmoud Ahmadinejad as Iran's new president, will only worsen this problem. The cost to the United States was also considerable. Sanctions, of course, meant that U.S. companies lost trade and investment opportunities. Indirect sanctions proved particularly costly. ILSA led to vociferous protests from European and other governments.
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As comprehensive sanctions take their toll over the longer term, Iran’s hardline factions are likely to flourish, and the United States risks losing the admiration of many of Iran’s people—including the younger generation.52 Resentment over the hardships caused by sanctions could reduce the prospects for improving or normalizing U.S. and Iranian relations over time, even if the current Iranian regime were to be replaced.
The Iranian uprising in 2009—called the Green Movement—was initiated by young Iranians who came out to the streets to protest fraudulent elections. As the crowds grew in cities throughout the nation (at their peak, nonviolent mass protests involved millions of Iranians), protesters began to demand greater political freedoms. This reform movement has been repressed, but not crushed or eliminated.53 We suspect that the young activists in the Green Movement represent a broader population of Iranians who admire American freedoms and want to live in an Iran where they have some of the same kinds of rights. The sustained imposition of crippling sanctions on Iran risks alienating Iranians under 30 years of age (nearly two-thirds of the entire Iranian population), as well as older Iranians. Reform-minded Iranians might decide that their first priority is to support their country and its government against the outside enemy.
In addition, sanctions have made it even more difficult for Iranian students and others to visit the United States or participate in cultural exchange programs—activities that the Iranian government has already done much to suppress.
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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.
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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.
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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.”
"Iran and the United States: Reconcilable Differences?
." Iranian Studies
. Vol. 41, No. 2 (April 2008): 139-154. [ More (2 quotes) ]
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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.
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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.
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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
. Congressional Research Service: Washington, D.C., April 21, 2015 (76p). [ More (5 quotes) ]
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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