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Is the Iran Sanctions Regime Working?

Introduction

More than four years have passed since Iranian Foreign Ministry spokesman Hassan Qashqavi's December 2008 statement that "Iran will never suspend uranium enrichment" (Reuters, December 9, 2008), In fact, despite sanctions, Iran has accelerated its enrichment activities, announcing in January 2013 its intention to install more sophisticated centrifuges in its Natanz plant to speed up the enrichment process (Agence France-Presse, February 3, 2013).

"We haven't really moved one inch toward addressing the issues," Mohamed ElBaradei, then director-general of the International Atomic Energy Agency told the Los Angeles Times in 2010. In a 2012 interview with the Financial Times of Germany, Yukiya Amano, new director general of the IAEA, announced that "what we know [about Iran's nuclear program] suggests the development of nuclear weapons."

The entire world seems to agree that Iran should not be allowed to develop nuclear weapons. Since the military option to deter Iran is a scenario that few want, or believe can work, the principal tactic that has been adopted to prevent Iran from creating a bomb is sanctions. Sanctions, imposed either unilaterally or multilaterally, are a peaceful and diplomatic avenue to make hardships for the regime - both economically and politically - to put them in a situation where a choice must be made between continuing the nuclear program or watching their country suffer. These sanctions have been internationally accepted since the adoption of the UN's Security Council Resolution 1737.

The United States and European Union have been the biggest supporters of sanctions against the Iranian regime and have been passing bills to impose sanctions for a number of years. Through the West's leadership, many international shipping agencies, traders, bankers and global insurance companies have also pulled their dealings with Iran.

American Sanctions

Despite the failure of three rounds of sanctions, Obama Administration officials said in January 2010 they intended to press for a new round of sanctions even as Russia and China continue to balk at the idea. Meanwhile, in early February 2010, Obama announced new unilateral sanctions by the United States, freezing "the assets in U.S. jurisdictions of a Revolutionary Guard general and four subsidiaries of a construction firm he runs for their alleged involvement in producing and spreading weapons of mass destruction." A day later, Iran announced it had begun enriching uranium to a higher level of purity, 20 percent, which is a step closer to producing weapons-grade uranium (Washington Post, February 11, 2010).

Former CIA director Leon Panetta said that while sanctions carry the possibilty to create serious economic problems and weaken the Iranian government, they do little to deter Iran's "ambitions with regards to nuclear capability." Israeli Prime Minister Benjamin Netanyahu said that sanctions have not done nearly enough to affect a change in Iran's nuclear program and, in testimony before a Senate intelligence committee in February 2012, CIA Director James Clapper said, "The sanctions as imposed so far have not caused [Iran] to change their behavior or their policy."

While the efficacy of the sanctions themselves is debatable, they are doomed for failure if not implemented correctly and unwaveringly supported. The United States has not fully implemented sanctions against Iran. Congress has passed a number of bills and the White House numerous executive orders regarding Iran sanctions - in July 2007, January 2010, November 2011, October 2012 and January 2013, to name a few- but the efficacy of these bills have been severely weakened by loopholes or waivers attached to them allowing the U.S. to delay their implementation. President Obama's Executive Order 13590, imposing sanctions on Iran's central bank, was delayed more than six months out of fear it would stimulate rising oil prices. Moreover, in March 2012, President Obama granted exemptions to Japan and ten European nations to allow them to continue doing limited business with Iran. To date, no U.S. Administration has fully implemented any of the sanctions against Iran in place since 1996.

European Sanctions

Likewise, European Union sanctions have fallen mostly on deaf ears. The EU has at times been unable to completely restrain nations from dealing with Tehran and, more importantly, Iran has been one of Europe's major foreign oil exporters. This need for crude oil has allowed Iran the maneuverability to get around sanctions, as profit from sales lessens the financial impact of sanctions. In January 2012, however, the EU finally passed an "unprecendented" resolution to embargo all Iranian oil and, to support its implementation set to begin in summer 2012, Saudi Arabia has promised to fulfill Europe's gas needs.

Also minimizing the impact of sanctions are UN member nations that supported Resolution 1737 in 2006 but continue to trade with Iran, proving to Iranian leaders that UN resolutions and international threats need not be taken seriously. Russia, China, Turkey and India, for example, have helped the Iranians steer clear of the negative consequences that sanctions place on its economy. In April 2012, Turkey and India announced that they are looking to lower their trade levels with Iran, however Russia and China both vigorously oppose sanctioning the regime. In 2012, Russia's Foreign Ministry said that sanctions are "deeply mistaken policy" and would be unlikely for Iran to "make any concessions or any corrections to its policies" because of sanctions.

Other Precedents

Asadollah Asgaroladi, Head of the Iranian-Chinese Chamber of Commerce, said in February 2013 that "the new round of Western sanctions will not affect Iran if five key trade partners - China, India, Turkey, Malaysia and Russia - continue to defy the embargo. Asgaroladi expressed confidence that these five countries would continue their trade relations with Iran as they have in the past (resalat-news.com, February 13, 2013).

Asgaroladi appears to be correct. As Patrick Clawson observed, "oil is becoming a smaller part of Iran's trade. In 2012, the country imported $57 billion in goods and exported $34 billion in non-oil products, meaning that non-oil exports covered 60% of the import bill, compared to 24% in 2002 and 14% in 1992. It produced this shift in part by converting more of its oil into industrial products for export." In addition to the five trade partners, Asgaroladi cited, Iran's largest market is Iraq ($5.6 billion) with the United Arab Emirates ($3.9 billion) and Afghanistan ($2.5 billion) also engaging in multibillion dollar exchanges. Clawson also notes that Iran is a net creditor to the banking system and he concludes that "even with reduced oil income due to sanctions, Iran's government finances are doing as well as (or better) than those of the United States and most other industrial countries" (Washington Institute for Near East Policy, April 3, 2013). One reason is that Iran has found ways to trade oil through deceptive means. Documents are faked to make Iranian oil appear it came from Iraq or Iranian oil is moved at see to a foreign tanker (The Economist, March 30, 2013).

History also works against the success of sanctions. As Simon Henderson noted, "Iran is unlikely to give up its nuclear program after seeing what happened to Qaddafi and Saddam Hussein, who were both driven from power, after acceding to international pressure to give up their nuclear ambitions" Simon Henderson, (Washington Institute for Near East Policy, October 23, 2012). Moreover, North Korea has faced crippling sanctions and isolation for years and has not given up its nuclear program. To the contrary, in February 2013 North Korea conducted a nuclear test.

In Senate testimony in March 2013, Gen. James Mattis, head of U.S. Central Command, said the Obama administration's strategy of sanctions and negotiations are not working. He said Iran has a history of denial and deceit and is "enriching uranium beyond any plausible peaceful purpose." Though he suggested it may still be possible to pressure Iran to drop its nuclear program, Mattis said he believed Iran is using negotiations to buy time (Huffington Post, March 5, 2013).

Sanctions are taking a heavy toll on Iran's economy, but they have not produced any public unrest that threatens the regime. While severe, the restrictions imposed so far have not brought the economy close to collapse.

Meanwhile, Iran continues to resist pressure to change its nuclear policy "through a combination of clever tactics, political repression and old-fashioned stubbornness." The ineffectiveness of sanctions continues to undermine the West's bargaining position in negotiations with Iran. In the February 2013 talks, the United States and five other world powers offered significant new concessions to Iran in exchange for curtailment of its uranium-enrichment program, but Iran did not accept the offer and made no counterproposal. If anything, the regime appears to be taking a tougher line, interpreting the West's concessions, and failure to pose a credible military threat, as weakness.

One Iranian cleric reiterated that economic pressure could never force Iran to abandon its nuclear program. "The Iranian nation is committed to resist arrogant powers, including the United States," said Ali Saeedi, the Iranian supreme leader's personal representative to the elite Revolutionary Guard Corps (Washington Post, March 17, 2013).