Jump to content

International sanctions against Iran

From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by Marcocapelle (talk | contribs) at 08:31, 6 May 2016 (removed Category:Political economy; added Category:Economic policy using HotCat). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Following the Iranian Revolution of 1979, the United States imposed sanctions against Iran and expanded them in 1995 to include firms dealing with the Iranian government.[1] In 2006, the UN Security Council passed Resolution 1696[2] and imposed sanctions after Iran refused to suspend its uranium enrichment program. U.S. sanctions initially targeted investments in oil, gas and petrochemicals, exports of refined petroleum products, and business dealings with the Iranian Revolutionary Guard Corps. This encompasses banking and insurance transactions (including with the Central Bank of Iran), shipping, web-hosting services for commercial endeavors, and domain name registration services.[3]

Over the years, sanctions have taken a serious toll on Iran's economy and people. Since 1979, the United States has led international efforts to use sanctions to influence Iran's policies,[4] including Iran's uranium enrichment program, which Western governments fear is intended for developing the capability to produce nuclear weapons. Iran counters that its nuclear program is for civilian purposes, including generating electricity and medical purposes.[5]

When nuclear talks between Iran and Western governments were stalled and seen as a failure, they were cited as a reason to enforce stronger economic sanctions on Iran.[6] On 2 April 2015, the P5+1 and Iran, meeting in Lausanne, Switzerland, reached a provisional agreement on a framework that, once finalized and implemented, would lift most of the sanctions in exchange for limits on Iran's nuclear programs extending for at least ten years.[7][8][9][10] As a result, UN sanctions were lifted on 16 January 2016.

UN sanctions against Iran

The UN Security Council passed a number of resolutions imposing sanctions on Iran, following the report by the International Atomic Energy Agency Board of Governors regarding Iran's non-compliance with its safeguards agreement and the Board's finding that Iran's nuclear activities raised questions within the competency of the Security Council. Sanctions were first imposed when Iran rejected the Security Council's demand that Iran suspend all enrichment-related and reprocessing activities. Sanctions will be lifted when Iran meets those demands and fulfills the requirements of the IAEA Board of Governors. To-date, Iran sanctions are the toughest the world community has imposed on any country.[11]

  • United Nations Security Council Resolution 1696 – passed on 31 July 2006. Demanded that Iran suspend all enrichment-related and reprocessing activities and threatened sanctions.
  • United Nations Security Council Resolution 1737 – passed on 23 December 2006 in response to the proliferation risks presented by the Iranian nuclear program and, in this context, by Iran's continuing failure to meet the requirements of the International Atomic Energy Agency Board of Governors and to comply with the provisions of Security Council resolution 1696 (2006).[12] Made mandatory for Iran to suspend enrichment-related and reprocessing activities and cooperate with the IAEA, imposed sanctions banning the supply of nuclear-related materials and technology, and froze the assets of key individuals and companies related to the program.
  • United Nations Security Council Resolution 1747 – passed on 24 March 2007. Imposed an arms embargo and expanded the freeze on Iranian assets.
  • United Nations Security Council Resolution 1803 – passed on 3 March 2008. Extended the asset freezes and called upon states to monitor the activities of Iranian banks, inspect Iranian ships and aircraft, and to monitor the movement of individuals involved with the program through their territory.
  • United Nations Security Council Resolution 1835 – Passed in 2008.
  • United Nations Security Council Resolution 1929 – passed on 9 June 2010. Banned Iran from participating in any activities related to ballistic missiles, tightened the arms embargo, travel bans on individuals involved with the program, froze the funds and assets of the Iranian Revolutionary Guard and Islamic Republic of Iran Shipping Lines, and recommended that states inspect Iranian cargo, prohibit the servicing of Iranian vessels involved in prohibited activities, prevent the provision of financial services used for sensitive nuclear activities, closely watch Iranian individuals and entities when dealing with them, prohibit the opening of Iranian banks on their territory and prevent Iranian banks from entering into relationship with their banks if it might contribute to the nuclear program, and prevent financial institutions operating in their territory from opening offices and accounts in Iran.
  • United Nations Security Council Resolution 1984 – passed on 9 June 2011. This resolution extended the mandate of the panel of experts that supports the Iran Sanctions Committee for one year.
  • United Nations Security Council Resolution 2049 – passed on 7 June 2012. Renewed the mandate of the Iran Sanctions Committee’s Panel of Experts for 13 months.
  • United Nations Security Council Resolution 2231 – passed on 20 July 2015. Sets out a schedule for suspending and eventually lifting UN sanctions, with provisions to reimpose UN sanctions in case of non-performance by Iran, in accordance with the Joint Comprehensive Plan of Action.

Non-UN-mandated sanctions against Iran

Sanctions by sector and source[13]
Sectors U.S. (1995– ) E.U. (2007– ) U.N. (2006–16)
Missile/arms industry Restricted Restricted
Revolutionary Guard Corps Restricted Restricted
Nuclear industry Restricted Restricted
Energy/petroleum industry Restricted Restricted
Banking Restricted Restricted
Central Bank of Iran Restricted Restricted
Shipping industry Restricted Restricted
International trade Restricted Restricted
Insurance Restricted Restricted
Foreign firms dealing with Iran Restricted

The European Union has imposed restrictions on cooperation with Iran in foreign trade, financial services, energy sectors and technologies, and banned the provision of insurance and reinsurance by insurers in member states to Iran and Iranian-owned companies.[14] On 23 January 2012, the EU agreed to an oil embargo on Iran, effective from July, and to freeze the assets of Iran's central bank.[15] The next month, Iran symbolically pre-empted the embargo by ceasing sales to Britain and France (both countries had already almost eliminated their reliance on Iranian oil, and Europe as a whole had nearly halved its Iranian imports), though some Iranian politicians called for an immediate sales halt to all EU states, so as to hurt countries like Greece, Spain and Italy who were yet to find alternative sources.[16][17]

On 17 March 2012, all Iranian banks identified as institutions in breach of EU sanctions were disconnected from the SWIFT, the world's hub of electronic financial transactions.

One side effect of the sanctions is that the global shipping insurers based in London are unable to provide cover for items as far afield as Japanese shipments of Iranian liquefied petroleum gas to South Korea.[18]

  • Beijing has tried to accommodate US concerns about Iran. It has not developed trade and investment positions there as rapidly as it might have, and has shifted some Iran-related transactional flows into Renminbi to help the Obama administration avoid sanctioning Chinese banks (similarly, India now pays for some Iranian oil imports in rupees).[19][20]
  • Australia has imposed financial sanctions and travel bans on individuals and entities involved in Iran's nuclear and missile programs or assist Iran in violating sanctions, and an arms embargo.[21]
  • Canada imposed a ban on dealing in the property of designated Iranian nationals, a complete arms embargo, oil-refining equipment, items that could contribute to the Iranian nuclear program, the establishment of an Iranian financial institution, branch, subsidiary, or office in Canada or a Canadian one in Iran, investment in the Iranian oil and gas sector, relationships with Iranian banks, purchasing debt from the Iranian government, or providing a ship or services to Islamic Republic of Iran Shipping Lines, but allows the Foreign Minister to issue a permit to carry out a specified prohibited activity or transaction.[22]
  • India enacted a ban on the export of all items, materials, equipment, goods, and technology that could contribute to Iran's nuclear program.[23] In 2012, the country said it was against expanding its sanctions.[24] India imports 12 percent of its oil from Iran and cannot do without it,[25] and the country plans to send a "huge delegation" to Iran in mid-March 2012 to further bilateral economic ties.[26][27] In July 2012, India has not approved the necessary insurance for Iranian ships hit by U.S. sanctions, effectively barring them from entering Indian waters.[28]
  • Israel banned business with or unauthorized travel to Iran under a law banning ties with enemy states.[29] Israel has also enacted legislation that penalizes any companies that violate international sanctions.[30] Following reports of covert Israeli-Iranian trade and after the US sanctioned an Israeli company for ties with Iran, Israel imposed a series of administrative and regulatory measures to prevent Israeli companies from trading with Iran, and announced the establishment of a national directorate to implement the sanctions.[31]
  • Japan imposed a ban on transactions with some Iranian banks, investments with the Iranian energy sector, and asset freezes against individuals and entities involved with Iran's nuclear program.[32] In January 2012, the second biggest customer for Iranian oil announced it would take "concrete steps" to reduce its 10% oil dependency on Iran.[33]
  • South Korea imposed sanctions on 126 Iranian individuals and companies.[34] Japan and South Korea together account for 26% of Iran's oil exports.[35]
  • Switzerland banned the sale of arms and dual-use items to Iran, and of products that could be used in the Iranian oil and gas sector, financing this sector, and restrictions on financial services.[36]
  • The United States has imposed an arms ban and an almost total economic embargo on Iran, which includes sanctions on companies doing business with Iran, a ban on all Iranian-origin imports, sanctions on Iranian financial institutions, and an almost total ban on selling aircraft or repair parts to Iranian aviation companies. A license from the Treasury Department is required to do business with Iran. In June 2011, the United States imposed sanctions against Iran Air and Tidewater Middle East Co. (which runs seven Iranian ports), stating that Iran Air had provided material support to the Iranian Revolutionary Guard Corps (IRGC), which is already subject to UN sanctions, that Tidewater Middle East is owned by the IRGC, and that both have been involved in activities including illegal weapons transportation.[37] The U.S. has also begun to designate a number of senior Iranian officials under the Iranian Human Rights Abuses Sanctions Regulations. On 14 December 2011, the U.S. Department of Treasury designated Hassan Firouzabadi and Abdollah Araqi under this sanctions program.[38] In February 2012 the US froze all property of the Central Bank of Iran and other Iranian financial institutions, as well as that of the Iranian government, within the United States.[39] The American view is that sanctions should target Iran's energy sector that provides about 80% of government revenues, and try to isolate Iran from the international financial system.[40] On 6 February 2013 the United States government blacklisted major Iranian electronics producers, Internet policing agencies, and the state broadcasting authority, in an effort to lessen restrictions of access to information for the general public. The sanctions were imposed to target Islamic Republic of Iran Broadcasting, which is responsible for broadcast policy in Iran and oversees production of Iranian television and radio channels. Also targeted were the "Iranian Cyber Police" and the "Communications Regulatory Authority" which the Treasury Department describes as authorities created three years ago to filter Web sites and monitor Internet behavior, while blocking Web sites deemed objectionable by the Iranian government. Currently, under American sanctions laws, any United States property held by blacklisted companies and individuals is impounded, and are prohibited from engaging in any transactions with American citizens.[41] In January 2015, the U.S. Senate Banking Committee advanced "a bill that would toughen sanctions on Iran if international negotiators fail to reach an agreement on Tehran's nuclear program by the end of June."[42]

Reasons for sanctions

On the web site of the U.S. Department of State is written as follows:

In response to Iran’s continued illicit nuclear activities, the United States and other countries have imposed unprecedented sanctions to censure Iran and prevent its further progress in prohibited nuclear activities, as well as to persuade Tehran to address the international community’s concerns about its nuclear program. Acting both through the United Nations Security Council and regional or national authorities, the United States, the member states of the European Union, Japan, the Republic of Korea, Canada, Australia, Norway, Switzerland, and others have put in place a strong, inter-locking matrix of sanctions measures relating to Iran's nuclear, missile, energy, shipping, transportation, and financial sectors.

These measures are designed: (1) to block the transfer of weapons, components, technology, and dual-use items to Iran’s prohibited nuclear and missile programs; (2) to target select sectors of the Iranian economy relevant to its proliferation activities; and (3) to induce Iran to engage constructively, through discussions with the United States, China, France, Germany, the United Kingdom, and Russia in the “E3+3 process,” to fulfill its nonproliferation obligations. These nations have made clear that Iran’s full compliance with its international nuclear obligations would open the door to its receiving treatment as a normal non-nuclear-weapon state under The Nonproliferation Treaty and sanctions being lifted.[43]

The website of the U.K. government states:

On 16 October 2012, the EU adopted a further set of restrictive measures against Iran as announced in Council Decision 2012/635/CFSP. These measures are targeted at Iran’s nuclear and ballistic programmes and the revenues made from these programmes by the Iranian government.

In response to the deteriorating human rights situation in Iran, the EU have also adopted Council Regulation (EU) No 359/2011 of 12 April 2011. This regulation has been amended by Council Regulation (EU) No 264/2012, which includes the Annex III list of equipment which might be used for internal repression and related services (e.g. financial, technical, brokering) and internet monitoring and telecommunications equipment and related services.[44]

In November 2011 the IAEA reported "serious concerns regarding possible military dimensions to Iran's nuclear programme" and indications that "some activities may still be ongoing."[45]

According to the Supreme leader of Iran, the real objective of sanctions is "to prevent Iran from reaching a prominent civilizational status" (as in history).[46]

Europe's General Court overturned European sanctions against two of Iran's biggest banks (Bank Saderat & Bank Mellat); the two banks had filed suit with the European court to challenge those sanctions.[47]

The European Union – which for years had condemned America's prospective "extraterritorial" application of national trade law and warned it would go to the WTO's Dispute Resolution Mechanism if Washington ever sanctioned European firms over Iran-related business. Russia, China and the other BRICS have also accommodated Washington’s increasing reliance on the threatened imposition of "secondary" sanctions against third-country entities doing business with Iran. [citation needed]

Removing sanctions against the banks would severely weaken Europe's sanctions regime. Other major players in Iran's economy, including the Central Bank of Iran and the National Iranian Oil Company, are now challenging their own sanctioned status. [citation needed]

Effects

U.S. and EU leaders are trying to tighten restrictions on business with Iran, which produced 3.55 million barrels of crude a day in January, 11 percent of OPEC's total, according to data compiled by Bloomberg.[48]

Bloomberg, 13 February 2012

The sanctions bring difficulties to Iran's $483 billion, oil-dominated economy.[15] Data published by the Iranian Central Bank show a declining trend in the share of Iranian exports from oil-products (2006/2007: 84.9%, 2007/2008: 86.5%, 2008/2009: 85.5%, 2009/2010: 79.8%, 2010/2011 (first three quarters): 78.9%).[49] The sanctions have had a substantial adverse effect on the Iranian nuclear program by making it harder to acquire specialized materials and equipment needed for the program. The social and economic effects of sanctions have also been severe,[50] with even those who doubt their efficacy, such as John Bolton, describing the EU sanctions, in particular, as "tough, even brutal."[51] Iranian foreign minister Ali Akhbar Salehi conceded that the sanctions are having an impact.[52] China has become Iran's largest remaining trading partner.[32]

Sanctions have reduced Iran's access to products needed for the oil and energy sectors, have prompted many oil companies to withdraw from Iran, and have also caused a decline in oil production due to reduced access to technologies needed to improve their efficiency.[citation needed] According to Undersecretary of State William Burns, Iran may be annually losing as much as $60 billion in energy investment.[53] Many international companies have also been reluctant to do business with Iran for fear of losing access to larger Western markets.[citation needed] As well as restricting export markets, the sanctions have reduced Iran's oil income by increasing the costs of repatriating revenues in complicated ways that sidestep the sanctions; Iranian analysts estimate the budget deficit for the 2011/2012 fiscal year, which in Iran ends in late March, at between $30bn to $50bn.[54] The effects of U.S. sanctions include expensive basic goods for Iranian citizens, and an aging and increasingly unsafe civil aircraft fleet. According to the Arms Control Association, the international arms embargo against Iran is slowly reducing Iran's military capabilities, largely due to its dependence on Russian and Chinese military assistance. The only substitute is to find compensatory measures requiring more time and money, and which are less effective.[55][56] According to at least one analyst (Fareed Zakaria), the market for imports in Iran is dominated by state enterprises and state-friendly enterprises, because the way to get around the sanctions is smuggling, and smuggling requires strong connections with the government. This has weakened Iranian civil society and strengthened the state.[citation needed]

The value of the Iranian rial has plunged since autumn 2011, it is reported to have devalued up to 80%, falling 10% immediately after the imposition of the EU oil embargo[57] since early October 2012,[58] causing widespread panic among the Iranian public.[54] In January 2012, the country raised the interest rate on bank deposits by up to 6 percentage points in order to curtail the rial's depreciation. The rate increase was a setback for Ahmadinejad, who had been using below-inflation rates to provide cheap loans to the poor, though naturally Iranian bankers were delighted by the increase.[54] Not long after, and just a few days after Iran's economic minister declared that "there was no economic justification" for devaluing the currency because Iran's foreign exchange reserves were "not only good, but the extra oil revenues are unprecedented,"[54] the country announced its intention to devalue by about 8.5 percent against the U.S. dollar, set a new exchange rate and vowed to reduce the black market's influence (booming, of course, because of the lack of confidence in the rial).[59] The Iranian Central Bank desperately tried to keep the value of the rial afloat in the midst of the late 2012 decline by pumping petrodollars into the system to allow the rial to compete against the US dollar.[60] Efforts to control inflation rates were set forth by the government through a three-tiered-multiple-exchange-rate;[61] this effect has failed to prevent the rise in cost of basic goods, simultaneously adding to the public's reliance on the Iranian black-market exchange rate network.[60] Government officials attempted to stifle the black-market by offering rates 2% below the alleged black-market rates, but demand seems to be outweighing their efforts.[62][63]

Sanctions tightened further when major supertanker companies said they would stop loading Iranian cargo. Prior attempts to reduce Iran's oil income failed because many vessels are often managed by companies outside the United States and the EU; however, EU actions in January extended the ban to ship insurance. This insurance ban will affect 95 percent of the tanker fleet because their insurance falls under rules governed by European law. "It's the insurance that's completed the ban on trading with Iran," commented one veteran ship broker.[64] This completion of the trading ban left Iran struggling to find a buyer for nearly a quarter of its annual oil exports.[16] Iran has sought to manage the impact of international sanctions and limit capital outflows by promoting a "resistance economy," replacing imports with domestic goods and banning luxury imports such as computers and mobile phones.[65] This is predicted to lead to an increase in smuggling, as "people will find a way to smuggle in what the Iranian consumer wants."[66] To sustain oil imports, Iran has also provided domestic insurance for tankers shipping Iranian oil.[67] Iran had hoped to sell more to Chinese and Indian refiners, though such attempts seem unlikely to succeed, particularly since China—the single-largest buyer of Iranian crude—has been curtailing its oil imports from Iran down to half their former level.[16]

Another effect of the sanctions, in the form of Iran's retaliatory threat to close the Strait of Hormuz, has led to Iraqi plans to open export routes for its crude via Syria, though Iraq's deputy prime minister for energy affairs doubted Iran would ever attempt a closure.[64]

After Iranian banks blacklisted by the EU were disconnected from the SWIFT banking network, Israeli Finance Minister Yuval Steinitz stated that Iran would now find it more difficult to export oil and import products. According to Steinitz, Iran would be forced to accept only cash or gold, which is impossible when dealing with billions of dollars. Steinitz told the Israeli cabinet that Iran's economy might collapse as a result.[68][69]

The effects of the sanctions are usually denied in the Iranian press.[70][71] Iran has also taken measures to circumvent sanctions, notably by using front countries or companies and by using barter trade.[72] At other times the Iranian government has advocated a "resistance economy" in response to sanctions, such as using more oil internally as export markets dry up and import substitution industrialization of Iran.[73][74]

In October 2012, Iran began struggling to halt a decline in oil exports which could plummet further due to Western sanctions, and the International Energy Agency estimated that Iranian exports fell to a record of 860,000 bpd in September 2012 from 2.2 million bpd at the end of 2011. The results of this fall led to a drop in revenues and clashes on the streets of Tehran when the local currency, the rial, collapsed. The output in September 2012 was Iran's lowest since 1988.[75]

Iranian Foreign Ministry spokesman Ramin Mehmanparast has said that the sanctions were not just aimed at Iran's nuclear program and would continue even if the nuclear dispute was resolved.[76]

In the face of increased economic pressure from the United States and Europe and a marked decrease of oil exports, Iran is seeking to build a resistance economy[77][78] as well as ongoing gold imports from Turkey.[79]

Political effects

94 Iranian Parliamentarians signed a formal request to have Ahmadinejad appear before the Majles (parliament) to answer questions about the currency crisis. The Supreme Leader terminated the parliament's request in order to unify the government in the face of international pressure.[80] Nonetheless, Ahmadinejad has been called to questioning by parliament on a number of occasions, to justify his position on issues concerning domestic politics. His ideologies seem to have alienated a large portion of the parliament, and stand in contrast to the standpoint of the Supreme Leader.[dubiousdiscuss][81][82]

A recent report by Dr. Kenneth Katzman, for the Congressional Research Service, listed the following factors as major examples of economic mismanagement on the part of the Iranian government:

  • The EU oil embargo and the restrictions on transactions with Iran’s Central Bank have dramatically reduced Iran’s oil sales – a fact acknowledged by Oil Minister Rostam Qasemi to the Majles on January 7, 2013. He indicated sales had fallen 40% from the average of 2.5 million barrels per day (mbd) in 2011 (see chart above on Iran oil buyers). This is close to the estimates of energy analysts, which put Iran’s sales at the end of 2012 in a range of 1 mbd to 1.5 mbd. Reducing Iran’s sales further might depend on whether U.S. officials are able to persuade China, in particular, to further cut buys from Iran—and to sustain those cuts.
  • Iran has been storing some unsold oil on tankers in the Persian Gulf, and it is building new storage tanks on shore. Iran has stored excess oil (21 million barrels, according to Citigroup Global Markets) to try to keep production levels up—shutting down wells risks harming them and it is costly and time consuming to resume production at a well that has been shut. However, since July 2012, Iran reportedly has been forced to shut down some wells, and overall oil production has fallen to about 2.6 million barrels per day from the level of nearly 4.0 mbd at the end of 2011.
  • The oil sales losses Iran is experiencing are likely to produce over $50 billion in hard currency revenue losses in a one-year period at current oil prices. The IMF estimated Iran’s hard currency reserves to be $106 billion as of the end of 2011, and some economists say that figure may have fallen to about $80 billion as of November 2012. Analysts at one outside group, the Foundation for the Defense of Democracies, believe Iran’s hard currency reserves might be exhausted entirely by July 2014 at current rates of depletion. Compounding the loss of oil sales by volume is that many of its oil transactions reportedly are now conducted on a barter basis—or in exchange for gold, which is hard currency but harder to use than cash is. In addition, the February 6, 2013, imposition of sanctions on Iran’s ability to repatriate hard currency could cause the depletion rate to increase.
  • On October 15, 2012, Iran said that to try to stretch its hard currency reserve, it would not supply hard currency for purchases of luxury goods such as cars or cellphones (the last 2 of the government’s 10 categories of imports, ranked by their importance). The government is still supplying hard currency for essential and other key imports. Importers for essential goods can obtain dollars at the official rate of 12,260 to the dollar, and importers of other key categories of goods can obtain dollars at a new rate of 28,500 to the dollar. The government has also threatened to arrest the unofficial currency traders who sell dollars at less than the rate of about 28,500 to the dollar. The few unofficial traders that remain active are said to be trading at approximately that rate so as not to risk arrest.
  • Some Iranians and outside economists worry that hyperinflation might result. The Iranian Central Bank estimated on January 9, 2013 that the inflation rate is about 27%—the highest rate ever acknowledged by the Bank—but many economists believe the actual rate is between 50% and 70%.[citation needed] This has caused Iranian merchants to withhold goods or shut down entirely because they are unable to set accurate prices. Almost all Iranian factories depend on imports and the currency collapse has made it difficult for Iranian manufacturing to operate.
  • Beyond the issue of the cost of imported goods, the Treasury Department’s designations of affiliates and ships belong to Islamic Republic of Iran Shipping Lines (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have further raised the prices of goods to Iranian import-export dealers. Some ships have been impounded by various countries for nonpayment of debts due on them.
  • Suggesting Iran’s operating budget is already struggling; some reports say the government has fallen behind in its payments to military personnel and other government workers. Others say the government has begun "means testing" in order to reduce social spending payments to some of the less needy families. In late 2012, it also postponed phase two of an effort to wean the population off subsidies, in exchange for cash payments of about $40 per month to 60 million Iranians. Phase one of that program began in December 2010 after several years of debate and delay, and was praised for rationalizing gasoline prices.[clarification needed] Gasoline prices now run on a tiered system in which a small increment is available at the subsidized price of about $1.60 per gallon, but amounts above that threshold are available only at a price of about $2.60 per gallon, close to the world price. Before the subsidy phase out, gasoline was sold for about 40 cents per gallon.
  • Press reports indicate that sanctions have caused Iran’s production of automobiles to fall by about 40% from 2011 levels. Iran produces cars for the domestic market, such as the Khodro, based on licenses from European auto makers such as Renault and Peugeot. The currency collapse has largely overtaken the findings of an IMF forecast, released in October 2012, which Iran would return to economic growth in 2013, after a small decline in 2012. An Economist Intelligence Unit assessment published in late 2012 indicates Iran’s Gross Domestic Product (GDP) likely contracted about 3% in 2012 and will contract an additional 1.2% in 2013. ("Oil Sanctions on Iran: Cracking Under Pressure.")
  • Mitigating some of the effects are that some private funds are going into the Tehran Stock Exchange and hard assets, such as property. However, this trend generally benefits the urban elite.[83]

Effect on oil price

According to the U.S., Iran could reduce the world price of crude petroleum by 10%, saving the United States annually $76 billion (at the proximate 2008 world oil price of $100/bbl). Opening Iran’s market place to foreign investment could also be a boon to competitive U.S. multinational firms operating in a variety of manufacturing and service sectors.[84]

In 2012, the U.S. Energy Department warned that imposing oil embargoes on Iran would increase world oil prices by widening the gap between supply and demand.[85]

On the other side, according to a US bipartisan study, oil prices "could double" if Iran is permitted to obtain a nuclear weapon.[86] U.S. gross domestic product could fall by about 0.6% in the first year—costing the economy some $90 billion—and by up to 2.5% (or $360 billion) by the third year. This is enough, at current[when?] growth rates, to send the country into recession.[87]

Humanitarian impact

Pharmaceuticals and medical equipments do not fall under international sanctions but the country is facing shortages of drugs for the treatment of 30 illnesses including cancer, heart and breathing problems, thalassemia and multiple sclerosis (MS) because Iran is not allowed to use the international payment systems.[88][89] A teenage boy died from hemophilia due to a shortage of medicine caused by the sanctions on Iran.[90] Delivery of some agricultural products to Iran have also been affected for the same set of reasons.[91]

Ordinary people were disproportionately affected by sanctions. The restrictions on obtaining and transferring currency into country led to serious shortages of medicine and medical supplies disrupting health services and particularly affecting cancer and hemophilia patients in Iran, as life-saving drugs became increasingly hard to find. Drug imports to Iran from U.S. and Europe was decreased by approximately 30 percent in 2012, according to a report by the Woodrow Wilson Center for International Scholars found that.[92] In 2013, The Guardian reported that some 85,000 cancer patients require chemotherapy and radiotherapy which are now scarce. Iranians with serious illnesses have been put at imminent risk by the unintended consequences of international sanctions, which have led to dire shortages of life-saving medicines such as chemotherapy drugs for cancer and bloodclotting agents for haemophiliacs. Western governments have built waivers into the sanctions regime to ensure that essential medicines get through, but those waivers are not functioning, as they conflict with blanket restrictions on banking, as well as bans on "dual-use" chemicals which might have a military application. In addition, there are 40,000 haemophiliacs who can't get anti-clotting medicines. Operations on haemophiliacs have been virtually suspended because of the risks created by the shortages. An estimated 23,000 Iranians with HIV/AIDS have had their access to the drugs they need to keep them alive severely restricted. The society representing the 8,000 Iranians suffering from thalassemia, an inherited blood disorder, has said its members are beginning to die because of a lack of an essential drug, deferoxamine, used to control the iron content in the blood. To make matters worse, Iran can no longer buy medical equipment such as autoclaves (sterilising machines), essential for the production of many drugs because some of the biggest western pharmaceutical companies refuse to have anything to do with Iran.[93]

In recent reports, the development of a medicinal black market has come to the forefront of international news, a desperate population resorting to any means to obtain, at times life saving, medications.[94] Though vital medicines are not affected by sanctions directly, the amount of hard currency being made available to the Minister of Health is what's causing a huge backlash on the amount of vital medicines being made available to the public. Iran's first female Minister Marziyeh Vahid Dastjerdi (since the Iranian Revolution) was dismissed in December for speaking out against the lack of support from the government in times of economic hardship.[95] Furthermore, Iranian patients are at risk of amplified side effects and reduced effectiveness because Iran is forced to import more medicines, and chemical building blocks for other medicines, from India and China, thereby replacing the higher quality products from Western manufacturers. Imports from American and European drug makers were down by an estimated 30 percent in 2012 and falling. Given the nature of patents in the world of pharmaceuticals, substitutions for advanced medicines is often unattainable, particularly when it comes to diseases such as cancer and multiple sclerosis.[96]

Civil movement against sanctions

The "Civil Movement" was initiated by two prominent Iranian economists, Dr. Mousa Ghaninejad – economist at Tehran's Petroleum University of Technology- and Dr. Mohammad Mehdi Behkish -economist at Tehran's Allameh Tabatabaei University- on 14 July 2013.

The two economists described sanctions as an "Unfair" and "Illogical" tool for political targets when free trade is concerned and Iranian people can ask the people around the world to replace the illogical tools with logical discussions. A more free economy will lead to less political enmity and the free trade carries amicable relationships between countries. In fact politics should be at the service of peace and economic growth. They also have emphasized that free market economy has proved to bring higher rate and growth and thus welfare for the people. Now enforcing sanctions to any country would in fact punish not only the people of the sanctioned country but also the people of trade partners of that country.

This movement was supported by large group of intellectuals, academics, civil-society activists, human right activists and artists around the world about which numerous reports appeared in the media.[97][98][99]

In September 2013, the International Chamber of Commerce-Iran posted an open letter by 157 Iranian economists, lawyers, and journalists complaining of the humanitarian consequences of sanctions and calling on their colleagues across the world to support the humanitarian campaign against sanctions on Iran and to persuade their governments to take steps to resolve the underlying conflict.[100]

Frozen assets

After the Iranian Revolution in 1979, the United States ended its economic and diplomatic ties with Iran, banned Iranian oil imports and froze approximately 11 billion 1980-US dollars of its assets.[101]

In recent years, billions of dollars of Iranian assets abroad have been seized or frozen, including a building in New York City, and bank accounts in Great Britain, Luxembourg, Japan and Canada.[102][103][104][105][106]

In 2012, Iran reported that the assets of Guard-linked companies in several countries have been frozen but in some cases the assets have been returned.[107]

The chairman of the Majlis Planning and Budget Committee says $100 billion of Iran’s money is frozen in foreign banks because of the sanctions imposed on the country.[108] As of 2013, only $30 billion to $50 billion of its foreign exchange reserves (i.e. roughly 50% of total) is accessible because of sanctions.[109]

Sanctions relief

With the accord between Iran and the P5+1 now reached, sanctions relief will affect the economy of Iran in four principal ways:[110]

  1. Release of Iran’s frozen funds abroad, estimated at over $100 billion as of 2015, of which approximately $29 billion was blocked.[111]
  2. The removal of sanctions against exports of Iranian oil.
  3. Allow foreign firms to invest in Iran’s oil and gas, automobiles, hotels and other sectors.
  4. Allow Iran to trade with the rest of the world and use the global banking system such as SWIFT.

According to the Central Bank of Iran, Iran will use funds unfrozen by its nuclear deal mainly to finance domestic investments, keeping the money abroad until it is needed.[112]

On January 16, 2016, it was announced by the International Atomic Energy Agency that the nation had adequately dismantled its nuclear weapons program, allowing for the United Nations to lift sanctions immediately.[113][114][115]

See also

References

  1. ^ Ariel Zirulnick (24 February 2011). "Sanction Qaddafi? How 5 nations have reacted to sanctions: Iran". The Christian Science Monitor. Retrieved 13 February 2012.
  2. ^ "Security Council demands Iran suspend uranium enrichment by 31 August, or face possible economic, diplomatic sanctions". United Nations. 31 July 2006.
  3. ^ "31 CFR 560.540 – Exportation of certain services and software incident to Internet-based communications". Legal Information Institute, Cornell University Law School. United States Statutes at Large. 10 March 2010. Retrieved 5 May 2013.
  4. ^ Younis, Mohamed (7 February 2013). "Iranians Feel Bite of Sanctions, Blame U.S., Not Own Leaders". Gallup World. Gallup. Retrieved 5 May 2013.
  5. ^ Michelle Nichols and Louis Charbonneau (5 October 2012). "U.N. chief says sanctions on Iran affecting its people". Reuters. United Nations. Retrieved 5 May 2013.
  6. ^ Timothy Alexander Guzman (10 April 2013). "New Economic Sanctions on Iran, Washington's Regime Change Strategy". Global Research. Retrieved 5 May 2013.
  7. ^ "Iranian nuclear deal: Mixed reaction greets tentative agreement". 3 April 2015.
  8. ^ Louis Charbonneau and Stephanie Nebehay (2 April 2015). "Iran, world powers reach initial deal on reining in Tehran's nuclear program". Reuters.
  9. ^ "Iran nuclear talks: 'Framework' deal agreed". BBC News.
  10. ^ Elise Labott, Mariano Castillo and Catherine E. Shoichet, CNN (2 April 2015). "Iran nuclear deal framework announced – CNN.com". CNN. {{cite web}}: |author= has generic name (help)CS1 maint: multiple names: authors list (link)
  11. ^ Joshua Mitnick (19 June 2014). "U.S. Treasury Secretary Reassures Israel on Iran Sanctions". Retrieved 23 June 2014.
  12. ^ "UN Sanctions". Department of foreign affairs and Trade. Australia. Retrieved 16 March 2013.
  13. ^ Solomon, Jay (26 June 2015). "Shift Clouds Iran Nuclear Deal". Wall Street Journal: A9.
  14. ^ Akbar E. Torbat, EU Embargoes Iran over the Nuke Issue, 8 July 2012, http://www.informationclearinghouse.info/article31795.htm
  15. ^ a b Ladane Nasseri (12 February 2012). "Iran Won't Yield to Pressure, Foreign Minister Says; Nuclear News Awaited". Bloomberg. Retrieved 13 February 2012.
  16. ^ a b c Javier Blas; Najmeh Bozorgmehr (20 February 2012). "Iran struggles to find new oil customers". The Financial times. Retrieved 21 February 2012.
  17. ^ "Iran stops oil sales to British, French companies". Reuters. 19 February 2012. Retrieved 19 February 2012. Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent . . . by more than a third—or over 300,000 barrels daily. . . . Iran was supplying more than 700,000 barrels per day to the EU plus Turkey in 2011, industry sources said.
  18. ^ "EU sanctions bring Iran's LPG exports to near halt". Reuters. 31 October 2012. Retrieved 1 November 2012.
  19. ^ "New sanctions on Iran constrict trade flows to Asia". Reuters. 7 February 2012.
  20. ^ "Iran And China Macgyver A Way Around US Sanctions". The American Interest.
  21. ^ Government of Australia, Australia's autonomous sanctions: Iran, 29 July 2010
  22. ^ Government of Canada, Sanctions against Iran, 26 July 2010
  23. ^ "India imposes more sanctions on Iran". The Hindu. 1 April 2011. Retrieved 13 February 2012.
  24. ^ Sandeep Dikshit (11 February 2012). "India against more sanctions on Iran". The Hindu. Chennai, India. Retrieved 13 February 2012.
  25. ^ "India won't cut Iranian oil imports despite US, EU sanctions: Pranab Mukherjee". The Times of India. Reuters. 30 January 2012. Retrieved 13 February 2012.
  26. ^ "Govt wants more exports to Iran". The Times of India. TNN. 10 February 2012. Retrieved 13 February 2012.
  27. ^ "Payment issue with Iran resolved: FIEO". The Economic Times. 2 March 2012. Retrieved 3 March 2012.
  28. ^ Mehdudia, Sujay (27 July 2012). "India bans U.S.-sanctioned Iranian ships from its waters". The Hindu. Chennai, India.
  29. ^ Attila Somfalvi (30 May 2011). "PM clarifies: Ties with Iran forbidden". Yedioth Ahronoth. Retrieved 13 February 2011.
  30. ^ France 24, "Israel to 'finally' impose sanctions on Iran", 3 March 2011
  31. ^ Herb Keinon (26 June 2011). "Gov't expands economic sanctions against Iran". The Jerusalem Post. Retrieved 13 February 2012.
  32. ^ a b "Japan imposes new Iran sanctions over nuclear programme". BBC News. 3 September 2010. Retrieved 13 February 2012.
  33. ^ "Q&A: Iran sanctions". BBC News. 6 February 2012. Retrieved 13 February 2012.
  34. ^ Choe Sang-Hun (8 September 2010). "South Korea Aims Sanctions at Iran". The New York Times. Retrieved 14 February 2012.
  35. ^ "Japan 'to reduce Iran oil imports'". BBC News. 12 January 2012. Retrieved 13 February 2012.
  36. ^ Reid, Katie (19 January 2011). "Switzerland brings Iran sanctions in line with EU". Reuters. Retrieved 25 February 2012.
  37. ^ Daniel Dombey (24 June 2011). "US widens scope of Iran sanctions". The Financial Times. Retrieved 14 February 2012.
  38. ^ OFAC Targets Two Iranians for SDN Designations, Sanction Law, 14 December 2011
  39. ^ Jackie Calmes; Rick Gladstone (6 February 2012). "Obama Imposes Freeze on Iran Property in U.S." The New York Times. Retrieved 13 February 2012.
  40. ^ Kenneth Katzman (3 February 2011). "Summary" (PDF). Iran Sanctions. Congressional Research Service. Retrieved 13 February 2012.
  41. ^ Gladstone, Rick (6 February 2013). "United States Announces New Iran Sanctions". The New York Times.
  42. ^ Zengerle, Patricia. "Senate panel advances Iran sanctions bill." Jewish Journal. 29 January 2015. 29 January 2015.
  43. ^ "Iran Sanctions".
  44. ^ "Embargoes and sanctions on Iran".
  45. ^ "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council resolutions in the Islamic Republic of Iran" (PDF). GOV/2011/65. paragraph 53: International Atomic Energy Agency. 8 November 2011. Retrieved 28 April 2013.{{cite web}}: CS1 maint: location (link)
  46. ^ http://presstv.com/Detail/2015/07/04/418777/Ayatollah-Khamenei
  47. ^ Jon Matonis. "EU Court Strikes Down Swift's Blockade Against Iranian Banks". Forbes.
  48. ^ Isaac Arnsdorf (13 February 2012). "Iran Sanctions Tighten as Shippers Stop Loading". Bloomberg. Retrieved 13 February 2012.
  49. ^ Iranian National Bank. "Economic Trends No 62, Third Quarter 1389 (2010/2011), Balance of Payments, p.16".
  50. ^ Editorial (17 February 2012). "Time to test Iran's nuclear intentions". The Financial Times. Retrieved 19 February 2012. Ratcheted-up sanctions, including an imminent oil embargo and the obstruction of Iran's ability to finance its trade, are having a big impact on the Iranian economy.
  51. ^ John R. Bolton (26 January 2012). "Don't Let Iran Benefit From EU Financial Crisis". Bloomberg. Retrieved 27 January 2012. [S]unny propaganda about the impact of economic sanctions on Iran is emanating from the Obama administration . . . however, there are only two possible outcomes: Either Iran gets nuclear weapons or it doesn't. To ensure that it doesn't, the only viable option is to break Iran's weapons program militarily.
  52. ^ Rick Gladstone (20 December 2011). "Iran Admits Western Sanctions Are Inflicting Damage". The New York Times. Retrieved 13 February 2012.
  53. ^ Flavia Krause-Jackson (1 December 2010). "Sanctions Cost Iran $60 Billion in Oil Investments, Burns Says". Bloomberg. Retrieved 13 February 2012.
  54. ^ a b c d Najmeh Bozorgmehr (25 January 2012). "Iran raises interest rate on bank deposits". The Financial Times. Retrieved 27 January 2012.
  55. ^ "The UN Sanctions' Impact on Iran's Military". Issue Brief – Volume 1, Number 7. Arms Control Association. 11 June 2010. Retrieved 13 February 2012.
  56. ^ "Toward a Negotiated Solution – Solving the Iranian Nuclear Puzzle Briefing Series". Arms Control Association. 20 January 2011. Retrieved 13 February 2012.
  57. ^ "Iran's rial drops 10 percent as EU bans oil imports". Al Arabiya. Reuters. 23 January 2012. Retrieved 27 January 2012.
  58. ^ "Iran's rial hits an all-time-low against the US dollar". BBC News. 1 October 2012.
  59. ^ Ladane Nasseri (26 January 2012). "Iran Central Bank Will Devalue Rial 8.5% Against Dollar as Sanctions Bite". Bloomberg. Retrieved 26 January 2012.
  60. ^ a b "Iran currency crisis: Sanctions detonate unstable rial". BBC News. 2 October 2012.
  61. ^ http://www.imf.org/external/pubs/ft/wp/1999/wp9915.pdf
  62. ^ "Iran's currency traders forced underground". Financial Times.
  63. ^ "Iran's Lying Exchange Rates". Cato Institute.
  64. ^ a b Kadhim Ajrash; Nayla Razzouk (12 February 2012). "Iraq Opens Offshore Oil Facility to Boost Export Capacity in Persian Gulf". Bloomberg. Retrieved 13 February 2012.
  65. ^ "Iran bans 'luxury' imports in bid to boost sanctions-hit economy". Associated Press. 8 November 2012. Retrieved 12 November 2012. {{cite news}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help) [dead link]
  66. ^ BRIAN MURPHY and NASSER KARIMI. "Iran bans 'luxury' imports as sanctions bite". Associated Press. Yahoo News. Retrieved 17 March 2013.
  67. ^ "Insurance bans on oil tankers save Iran $700m: Official". PressTV`. 12 September 2012. Retrieved 12 November 2012.
  68. ^ "Steinitz: SWIFT sanctions may lead to Iran's economic collapse". ynet.
  69. ^ Saeed Kamali Dehghan (24 February 2012). "Tehran prepares for an unhappy holiday season". London: guardian.co.uk. Retrieved 25 February 2012.
  70. ^ Economic Desk (24 February 2012). "Sanctions not affecting Iran's oil output". Tehran Times. Retrieved 25 February 2012.
  71. ^ "Iran media warned off of reporting negatively on economy, sanctions". Los Angeles Times. 12 July 2012.
  72. ^ Bengali, Shashank (9 September 2012). "Iran finds ways around sanctions targeting oil sales". Los Angeles Times. Retrieved 2 October 2012.
  73. ^ John Pike. "Iran mulls cut to crude oil sale".
  74. ^ "Iran develops 'economy of resistance'". Financial Times.
  75. ^ "IEA: Iran's oil exports fell, may slip further". Reuters. The Jerusalem Post. 12 October 2012. Retrieved 14 October 2012.
  76. ^ John Pike. "Iran decries Western governments analysis about sanctions on Iran".
  77. ^ Farideh Farhi (27 July 2012).Sanctions and the shaping of Iran’s"Resistance Economy"LobeLog.com-Foreign Policy. Retrieved 9 February 2013.
  78. ^ T. Erdbrink and D. Sanger (6 February 2013)."U.S. Increases Pressure of Economic War on Tehran" The New York Times. Retrieved 9 February 2013.
  79. ^ Reuters Editorial (7 February 2013). "UPDATE 1-Turkey will not halt gold flow to Iran, demand may fall". Reuters. {{cite web}}: |author= has generic name (help)
  80. ^ https://fas.org/sgp/crs/mideast/RS20871.pdf, Kenneth Katzman
  81. ^ "Grilled by Iran's Parliament, Ahmadinejad Is Defiant as Ever". TIME.com. 15 March 2012.
  82. ^ Gladstone, Rick; Cowell, Alan (14 March 2012). "Iranian Parliament Questions Ahmadinejad". The New York Times.
  83. ^ https://fas.org/sgp/crs/mideast/RS20871.pdf Dr. Kenneth Katzman
  84. ^ Dean A. DeRosa & Gary Clyde Hufbauer: "Normalization of Economic Relations". (U.S.) National Foreign Trade Council. 21 November 2008. Retrieved 30 March 2012.
  85. ^ Oil sanctions on Iran to worsen global market: US. PressTV, 29 October 2012. Retrieved 11 November 2012.
  86. ^ "REPORT: Nuclear Iran would 'double' oil prices, cost millions of U.S. jobs". Washington Free Beacon.
  87. ^ "The Economic Cost of a Nuclear Iran".
  88. ^ "Iran Sanctions Result In Shortages of Cancer Drugs, Heart Medicine".
  89. ^ Dehghan, Saeed Kamali (14 November 2012). "Haemophiliac Iranian boy 'dies after sanctions disrupt medicine supplies'". The Guardian. London.
  90. ^ "Blood sanctions: Iranian boy dies from medicine shortage". RT International.
  91. ^ Saul, Jonathan; George, Marcus (28 November 2012). "Sanctions side effect hits Iran's food system". Reuters.
  92. ^ Varkiani, Adrienne. "Ordinary People Will Finally Begin To See Benefits Of The Iranian Nuclear Deal". ThinkProgress. Retrieved 18 January 2016.
  93. ^ Borger, Julian; Dehghan, Saeed Kamali (13 January 2013). "Iran unable to get life-saving drugs due to international sanctions". The Guardian. London.
  94. ^ http://bigstory.ap.org/article/irans-medical-crisis-deepens-economy-sputters
  95. ^ "Iran's only woman minister sacked for speaking out over health cuts". The Times.
  96. ^ http://www.wilsoncenter.org/sites/default/files/sanctions_medical_supply_shortages_in_iran.pdf
  97. ^ "Iran's Civil Society Movement Against Sanctions - Al-Monitor: the Pulse of the Middle East". Al-Monitor.
  98. ^ "جنبش مدني عليه تحريم، چگونه؟".
  99. ^ "هفته نامه تجارت فردا - خیزشی برای صلح".
  100. ^ "A Call by Iranian Economists, Lawyers, and Journalists to their Colleagues across the Globe for Support of the Campaign against Sanctions on Iran". ICC-Iran. 21 September 2013. Retrieved 25 September 2013.
  101. ^ Suzanne Maloney (2010): "The Revolutionary Economy". United States Institute of Peace. Retrieved 17 November 2010.
  102. ^ Kessler, Glenn. "U.S. Links Iranian Bank To Fifth Avenue Building". The Washington Post.
  103. ^ http://previous.presstv.com/detail/98465.htm?sectionid=351020101
  104. ^ "U.S. froze $2 billion held for Iran in Citibank: report". Reuters. 12 December 2009.
  105. ^ "Japanese bank freezes Iranian assets". Financial Times.
  106. ^ Adrian Humphreys (1 November 2012). "Iran's Canadian assets frozen over $13M U.S. terrorism payout". National Post.
  107. ^ "News – Industry and Trade Minister: Western Sanctions 'Paralyzing' Iran". FRONTLINE – Tehran Bureau.
  108. ^ http://www.tehrantimes.com/politics/111742-100-billion-of-irans-money-frozen-in-foreign-banks-mp
  109. ^ Marjorie Olster (23 August 2013). "Sanctions Biting but Iran Not Budging". AP. Retrieved 24 August 2013. {{cite news}}: Italic or bold markup not allowed in: |work= (help)
  110. ^ "How Sanctions Relief Can Help and Hurt the Iranian Economy".
  111. ^ "Iran to use frozen funds to fund investments -c.bank". 23 July 2015.
  112. ^ "Iran to use frozen funds to fund investments -c.bank". Yahoo Finance. 23 July 2015.
  113. ^ Nasrella, Shadia (16 January 2016). "Iran Says International Sanctions To Be Lifted Saturday". The Huffington Post. Reuters. Retrieved 16 January 2016.
  114. ^ Chuck, Elizabeth (16 January 2016). "Iran Sanctions Lifted After Watchdog Verifies Nuclear Compliance". NBC News. Reuters. Retrieved 16 January 2016.
  115. ^ Melvin, Dan. "UN regulator to certify Iran compliance with nuke pact – CNN.com". CNN. Retrieved 16 January 2016.

Further reading

  • Cordesman, Anthony H., Bryan Gold, and Chloe Coughlin-Schulte. Iran: Sanctions, Energy, Arms Control, and Regime Change (Rowman & Littlefield, 2014)
  • Marossi, Ali Z., and Marisa R. Bassett, eds. Economic Sanctions under International Law: Unilateralism, Multilateralism, Legitimacy, and Consequences ( T.M.C. Asser Press, 2015), specialized essays by experts online
Videos