Sanctions against Iran
The first sanctions against Iran were those imposed by the United States in November 1979 after a group of radical students seized the American Embassy in Tehran and took hostage the people inside. The sanctions by Executive Order 12170 included freezing about $12 billion in Iranian assets, including bank deposits, gold and other properties, and a trade embargo. These sanctions were lifted as part of the Algiers Accords which was a negotiated settlement of the hostages’ release.
The United States under Ronald Reagan imposed new sanctions in 1987 after Iran's actions from 1981-1987 against U.S. and other shipping vessels in the Persian Gulf and support for terrorism. The sanctions were expanded in 1995 to include firms dealing with the Iranian government.
In 2006, the UN Security Council passed Resolution 1696 which demanded that Iran halt its uranium enrichment program, and in December passed Resolution 1737 to impose sanctions after Iran refused to comply. Initially, U.S. sanctions targeted investments in oil, gas, and petrochemicals, exports of refined petroleum products, and business dealings with the Islamic Revolutionary Guard Corps (IRGC). It encompassed banking and insurance transactions (including with the Central Bank of Iran), shipping, web-hosting services for commercial endeavors, and domain name registration services. Subsequent UN Resolutions have expanded sanctions against Iran.
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, 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.
When nuclear talks between Iran and Western governments were stalled and seen as a failure,[when?] they were cited as a reason to enforce stronger economic sanctions on Iran.[better source needed] 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. The final agreement, the Joint Comprehensive Plan of Action, was adopted on 18 October 2015. As a result, UN sanctions were lifted on 16 January 2016.
On 8 May 2018, U.S. President Donald Trump announced that the United States would withdraw from the Iran nuclear deal. Following the U.S. withdrawal, the EU enacted an updated blocking statute on 7 August 2018 to nullify US sanctions on countries trading with Iran. U.S. sanctions came into effect in November 2018 intended to force Iran to dramatically alter its policies in the region, including its support for militant groups in the region and its development of ballistic missiles.
UN sanctions against IranEdit
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. Most UN sanctions were lifted 16 January 2016, following the Joint Comprehensive Plan of Action.
- 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). 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.
In August 2018, EU High Representative Mogherini, speaking at a briefing with New Zealand's Foreign Minister Winston Peters, challenged U.S. sanctions on Iran, stating that the EU are encouraging small and medium size enterprises in particular to increase business with and in Iran as part of something that is for the EU a "Security Priority".
Non-UN-mandated sanctions against IranEdit
This section needs to be updated.January 2017)(
|Sectors||U.S. (1995– )||E.U. (2007– )||U.N. (2006–16)|
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|Central Bank of Iran||Restricted||Restricted||Removed|
|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. 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. 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.
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. On 10 November 2018 Gottfried Leibbrandt, chief executive of SWIFT said in Belgium that some banks in Iran would be disconnected from this financial messaging service.
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.
- 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).
- 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.
- 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.
- India enacted a ban on the export of all items, materials, equipment, goods, and technology that could contribute to Iran's nuclear program. In 2012, the country said it was against expanding its sanctions. India imports 12 percent of its oil from Iran and cannot do without it, and the country plans to send a "huge delegation" to Iran in mid-March 2012 to further bilateral economic ties. 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.
- Israel banned business with or unauthorized travel to Iran under a law banning ties with enemy states. Israel has also enacted legislation that penalizes any companies that violate international sanctions. 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.
- 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. In January 2012, the second biggest customer for Iranian oil announced it would take "concrete steps" to reduce its 10% oil dependency on Iran.
- South Korea imposed sanctions on 126 Iranian individuals and companies. Japan and South Korea together account for 26% of Iran's oil exports.
- 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.
- 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 Islamic 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. 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. 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. 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. 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. 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." On 5 November 2018, the United States government reinstated all sanctions against Iran. These sanctions had been previously lifted in accordance to the Joint Comprehensive Plan of Action.
- On 16 April 2019, a day after United States designated Iran’s Islamic Revolutionary Guards Corps (IRGC) as a Foreign Terrorist Organizations, the social media platform Instagram blocked the accounts of the IRGC, the Quds Force, its commander Qasem Soleimani, and three other IRGC commanders.
Reasons for sanctionsEdit
In 2012, the U.S. Department of State stated:
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.
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.
The British Broadcasting Corporation (BBC), in answering "Why are there sanctions?" wrote in 2015:
- Since Iran's nuclear programme became public in 2002, the International Atomic Energy Agency (IAEA) has been unable to confirm Tehran's assertions that its nuclear activities are exclusively for peaceful purposes and that it has not sought to develop nuclear weapons....
- The United Nations Security Council has adopted six resolutions since 2006 requiring Iran to stop enriching uranium - which can be used for civilian purposes, but also to build nuclear bombs - and co-operate with the IAEA. Four resolutions have included progressively expansive sanctions to persuade Tehran to comply. The US and EU have imposed additional sanctions on Iranian oil exports and banks since 2012.
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."
Legal challenges to the sanctionsEdit
The European Union's General Court overturned EU 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.
—Bloomberg, 13 February 2012
The sanctions bring difficulties to Iran's $483 billion, oil-dominated economy. 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%). 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, with even those who doubt their efficacy, such as John Bolton, describing the EU sanctions, in particular, as "tough, even brutal." Iranian foreign minister Ali Akhbar Salehi conceded that the sanctions are having an impact. China has become Iran's largest remaining trading partner.
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. According to Undersecretary of State William Burns, Iran may be annually losing as much as $60 billion in energy investment. Many international companies have also been reluctant to do business with Iran for fear of losing access to larger Western markets. 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. 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. 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.
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 since early October 2012, causing widespread panic among the Iranian public. 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. 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," 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 (presumably booming because of the lack of confidence in the rial). 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. Efforts to control inflation rates were set forth by the government through a three-tiered-multiple-exchange-rate; 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. 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.
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. This completion of the trading ban left Iran struggling to find a buyer for nearly a quarter of its annual oil exports.
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.
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.
The effects of the sanctions are usually denied in the Iranian press. Iran has also taken measures to circumvent sanctions, notably by using front countries or companies and by using barter trade. 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.
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.
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.
In the face of increased economic pressure from the United States and Europe and a marked decrease of oil exports, Iran has sought to manage the impact of international sanctions and limit capital outflows by seeking to build a "resistance economy," replacing imports with domestic goods and banning luxury imports such as computers and mobile phones. This is predicted to lead to an increase in smuggling, as "people will find a way to smuggle in what the Iranian consumer wants." To sustain oil imports, Iran has also provided domestic insurance for tankers shipping Iranian oil. 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.
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. 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.[dubious ]
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 7 January 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 6 February 2013, imposition of sanctions on Iran's ability to repatriate hard currency could cause the depletion rate to increase.
- On 15 October 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 9 January 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%. 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.
Effect on oil priceEdit
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.
On the other side, according to a 2012 study by former U.S. officials writing for the Bipartisan Policy Center, oil prices "could double" if Iran is permitted to obtain a nuclear weapon. 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 2012 growth rates, to send the U.S. into recession.
In September 2018, Iranian oil minister Bijan Zanganeh warned U.S. President Donald Trump to stop interfering in Middle East if he wants the oil prices to stop increasing. Zanganeh said “If he (Trump) wants the price of oil not to go up and the market not to get destabilized, he should stop unwarranted and disruptive interference in the Middle East and not be an obstacle to the production and export of Iran’s oil.”
Pharmaceuticals and medical equipment do not fall under international sanctions, but Iran is facing shortages of drugs for the treatment of 30 illnesses—including cancer, heart and breathing problems, thalassemia and multiple sclerosis (MS)—because it is not allowed to use international payment systems. A teenage boy died from haemophilia because of a shortage of medicine caused by the sanctions. Deliveries of some agricultural products to Iran have also been affected for the same reasons.
Drug imports to Iran from the U.S. and Europe decreased by approximately 30 percent in 2012, according to a report by the Woodrow Wilson International Center for Scholars. In 2013, The Guardian reported that some 85,000 cancer patients required forms of chemotherapy and radiotherapy that had become scarce. Western governments had built waivers into the sanctions regime to ensure that essential medicines could get through, but those waivers conflicted with blanket restrictions on banking, as well as bans on "dual-use" chemicals that might have a military as well as a medical application. An estimated 40,000 haemophiliacs could not get blood-clotting medicines, and operations on haemophiliacs were been virtually suspended because of the risks created by the shortages. An estimated 23,000 Iranians with HIV/AIDS had severely restricted access to the drugs they need. The society representing the 8,000 Iranians suffering from thalassemia, an inherited blood disorder, said its members were beginning to die because of a lack of an essential drug, deferoxamine, used to control the iron content in the blood. Further, Iran could no longer buy medical equipment such as autoclaves, essential for the production of many drugs, because some of the biggest Western pharmaceutical companies refused to do business with the country.
Journalists reported on the development of a black market for medicine. Though vital drugs were not affected directly by the sanctions, the amount of hard currency available to the ministry of health was severely limited. Marzieh Vahid-Dastjerdi, Iran's first female government minister since the Iranian Revolution, was dismissed in December 2012 for speaking out against the lack of support from the government in times of economic hardship. Furthermore, Iranian patients were at risk of amplified side effects and reduced effectiveness because Iran was forced to import medicines, and chemical building blocks for other medicines, from India and China, as opposed to obtaining higher-quality products from Western manufacturers. Because of patent protections, substitutions for advanced medicines were often unattainable, particularly when it came to diseases such as cancer and multiple sclerosis.
Civil movement against sanctionsEdit
The "Civil Movement" was initiated by two prominent Iranian economists—Dr. Mousa Ghaninejad, of Tehran's Petroleum University of Technology, and Dr. Mohammad Mehdi Behkish, of Tehran's Allameh Tabatabaei University—on 14 July 2013. They described the sanctions as an "unfair" and "illogical" tool, arguing that a freer economy would lead to less political enmity and encourage amicable relationships between countries. They also noted that sanctions against one country punish not only the people of that country, but also the people of its trade partners.
The movement was supported by a large group of intellectuals, academics, civil society activists, human rights activists and artists. In September 2013, the International Chamber of Commerce-Iran posted an open letter by 157 Iranian economists, lawyers and journalists criticizing the humanitarian consequences of sanctions and calling on their colleagues across the world to pressure their governments to take steps to resolve the underlying conflict.
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.
In the years of 2008 to 2013, billions of dollars of Iranian assets abroad were seized or frozen, including a building in New York City, and bank accounts in Great Britain, Luxembourg, Japan and Canada.
The chairman of the Majlis Planning and Budget Committee says $100 billion of Iran's money was frozen in foreign banks because of the sanctions imposed on the country. In 2013, only $30 billion to $50 billion of its foreign exchange reserves (i.e. roughly 50% of total) was accessible because of sanctions.
- Release of Iran's frozen funds abroad, estimated at $29 billion, representing approximately one third of Iran's foreign held reserves.
- The removal of sanctions against exports of Iranian oil.
- Allow foreign firms to invest in Iran's oil and gas, automobiles, hotels and other sectors.
- Allow Iran to trade with the rest of the world and use the global banking system such as SWIFT.
According to the Washington Institute in 2015: "The pre-deal asset freeze did not have as great an impact on the Iranian government as some statements from Washington suggested. And going forward, the post-deal relaxation of restrictions will not have as great an impact as some critics of the deal suggest."
On 16 January 2016, it was announced by the International Atomic Energy Agency that Iran had adequately dismantled its nuclear weapons program, allowing for the United Nations to lift sanctions immediately.
In February 2019, France, Germany and the United Kingdom announced that they have created a payment channel named INSTEX to bypass the newly-reimposed sanctions by the United States, following the unilateral withdrawal from the JCPOA by the Trump administration.
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