By
Ali Mostashari, Ph.D. Candidate, MIT
Source:
Iran Analysis
Quarterly, Fall Issue
Economic Sanctions as a Tool of Political
Pressure
One of the tools of exerting political pressure on
other countries by powerful economies has been the use of sanctions. As defined
by Jentleson, sanctions are ““the actual or threatened denial of economic
relations by one or more states (sender(s)) intended to influence the behavior
of another state (target) on non-economic issues or to limit its military
capabilities”. There are however few practical objective criteria for measuring
whether or not sanctions are effective, and there is great controversy on their
efficacy (Jentleson 2000). It has been argued that that sanctions, if not
designed carefully can lead to the solidification of power in the target
country, impacting the population, while not achieving any change in behavior on
behalf of the state (Drezner 1999). Many policy analysts have therefore argued
for “smart” or targeted sanctioning (Rogers 1996, Cortright and Lopez 2002).
According to the Congressional Research Service, by the end of 1997 there
were 191 different sanctions being imposed by the United States. A 1997 study by
the Institute for International Economics found that since 1970, unilateral U.S.
sanctions had achieved foreign policy goals only 13 percent of the time. The
study also concluded that sanctions are costing the United States $15 billion to
$19 billion annually in potential exports
Short History of U.S. Sanctions on
Iran
The first U.S. sanctions against Iran were formalized in
November of 1979, and during the hostage crisis, many sanctions were leveled
against the Iranian government. By 1987 the import of Iranian goods into
the United States had been banned. In 1995, President Clinton issued Executive
Order 12957, banning U.S. investment in Iran's energy sector, followed a few
weeks later by Executive Order 12959 of May 6, 2000, eliminating all trade and
investment and virtually all interaction between the United States and
Iran.
Effect of Sanctions
According to the Institute for International Economics (IIE)
sanctions rarely work in the way they are intended. Many argue that sanctions,
particularly unilateral sanctions such as those targeted at Iran, are less and
less effective in a global economy, where governments have the opportunity to
procure their strategic needs from other countries. Instead sanctions are likely
to impose further hardship on the poor, while seldom adversely affecting the
regime and government officials.
If the intent of the sanctions was to
limit the Iranian government’s military or nuclear procurements, or limit
investments in oil and gas exploration, the sanctions have been a total failure.
European companies have taken the lead in investing in Iranian oil and gas
fields in the Persian Gulf. According to EU statistics, Iran exported 6.7
billion Euros in Oil and other goods to the EU, while importing 6.6 billion
Euros worth of European goods. Iran’s cooperation with Russia, Pakistan and
other countries on procuring equipment for its nuclear power plants have also
not been affected by the sanctions. In terms of military equipment, in a recent
Security equipment exhibition in Tehran, US security products such as
closed-circuit televisions produced by Pelco, face-recognition systems by
Visionics, access control by Apollo Security, satellite pictures by Space
Imaging, printers by Hewlett-Packard and communications equipment by Motorola
were on display.
However, if the intent of the sanctions was to
punish the Iranian population, sanctions can be deemed quite effective. Iranian
state-owned airlines are flying dilapidated planes that put passengers at risk,
and the consumers purchase U.S. products at double or triple their original
price. Iranian students intending to study at U.S. academic institutions cannot
take standardized tests such as TOEFL and GRE, and Iranian academics are barred
from publishing papers in U.S. based scientific journals, since the U.S.
Treasury considers editing an article a financial service. The sanctions have
also strengthened the grip of economic Mafia close to conservative hardliners in
Iran to control most of Iran’s economy. With trade channels limited, only those
with control over assets and networks can dominate economic activity. Iran’s
private sector has been hit the hardest, being at the mercy of semi-state owned
foundations such as the Mostaz’afan Foundation and other units dominating the
Iranian economy. Iranian government officials have also used sanctions
extensively as an excuse for many domestic mismanagements and shifts the blame
away from its source (Haass, 1999). In summary, it could be argued that the
sanctions are undermining the growth of a civil society that could serve as a
vehicle for democratization in the country.
Many proponents of U.S.
sanctions against Iran have argued that sanctions can serve to increase
dissatisfaction with the Iranian government and increase the likelihood of an
internal regime change (Gordon, 2001). This apparently did not work in the case
of Iraq, where far harsher, multilateral sanctions were in effect, and it is far
less likely to happen in Iran. In fact, at any time the Iranian government has
felt less isolated, it has been more responsive to the international community.
The fact that European pressures on Iran are far more effective than pressures
applied by the U.S. may be explained by the large investment of European firms
in the Iranian oil and gas industries, as well as extensive trade. It has been
argues that rather than instead of promoting democratization and moderation,
sanctions may in fact play into the hands of hardliners who have used the
potential of American aggression to justify repressive and isolationist policies
(Iran Today,
2001).
Change on the Horizon?
The decision of the
Bush administration to suspend the sanctions against Iran for 90 days, in light
of the Bam earthquake, has signaled willingness from the U.S. government to
consider easing pressure on the Iranian population. More than $1.2 million have
been raised in the first two weeks by Iranian-Americans and sent to earthquake
victims, mostly through international organizations and Iranian non-governmental
organizations (NGO). The activism of the NGOs in delivering timely aid to the
disaster areas showed the importance of the Iranian civil society in organizing
for change in the country. While the Bush administration has noted that the move
was humanitarian in nature, and not a change in policies, it would be very much
to the advantage of the Bush administration in the election year to win over the
Iranian people, and the Iranian-American voters by focusing sanctions in a way
that does not harm the Iranian population. A historic move towards opening up
trade and strengthening the Iranian private sector and civil society could prove
more fruitful than the isolationist policies of the past 25 years, which have
not had any significant effect on social and political changes in Iran. Still,
it is too soon to predict whether this administration will be the one breaking
the impasse.
References
Drezner, D. 1999. The Sanctions Paradox:
Economic Statecraft and International
Relations. Cambridge: Cambridge
University Press.
Gordon, B., “The Role and Influence of Interest
Groups on US Sanctions Against Iran” in The U.S. Congress and Iran: Twenty
Years After the Revolution, the Middle East Institute, 2001
Haass,
R., Statement before the Subcommittee on Trade, Committee on Ways and Means,
U.S. House of Representatives, May 27, 1999
Institute for
International Economics, Case Studies in Sanctions and Terrorism
Case
84-1 US v. Iran, 2001
Iran Today, “U.S. Sanctions against Iran:
Time for Reassessment”, Opinion Editorial, January 2001
Jentleson, B.
2000. “Economic Sanctions and Post-Cold War Conflict.” in International
Conflict Resolution after the Cold War, ed. Paul Stern and Daniel Druckman.
Washington, DC: National Academy Press.
Pelletreau, R. H., “What
Direction for U.S. Sanctions on Iran?”, Gulfwire Perspectives,
About the
Author:
Ali Mostashari is a Ph.D. Candidate in Engineering
Systems/Technology Management and Policy at the Massachusetts Institute of
Technology. He is currently the President of the Iranian Studies Group at MIT.
He received his Bachelor of Science in Chemical Engineering from Sharif
University of Technology, a Master of Science in Chemical Engineering from the
University of Nebraska, an Master of Science in Engineering Systems/Technology
and Policy from MIT and a Master of Science in Civil and Environmental
Engineering/Transportation from MIT. His main area of research interest is the
sustainable technological development of developing countries, with a main focus
on Iran and the Middle East.
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