What Will do the Trick?

Much has been written about the effectiveness of international economic sanctions. After World War II, the official policy of racial segregation in South Africa led to the increasing international isolation of the Apartheid regime. By early 1960s, UN General Assembly economic sanctions—a boycott of South African goods and a refrain of exports to South Africa—together with a UN Security Council arms embargo, formalized international pressure on the South African government. More sanctions followed suit in the 1970s and 1980s, from the UN, the US, the then European Economic Community, the Commonwealth, post-colonial African countries, and international banks, together with a massive disinvestment campaign. This international pressure and South Africa’s increasing political and economic isolation led, first, to a reform of The National Party’s racial policies and negotiations with the black community and, eventually, to its breakdown.

South Africa is a unique case of wide unanimity regarding the justification for tough economic sanctions. It is also a distinct example of sanctions that fulfilled their mission—to pressure the South African government to change its behaviour. In general, economic sanctions are believed to have a contradictory effect as they are more likely to hurt the population than the regime they are meant to target.

It is now a unanimous opinion that Iran’s nuclear programme is not exclusively for civilian purposes. Ahmadinejad’s orders to Iranian nuclear scientists to enrich uranium up to 20%, and the opening of 10 other enrichment plants, together with a reinforced air-defence system leave no room for doubt. As the US leads the effort to impose a new regime of sanctions on Iran, the traditional argument that sanctions don’t work and that sanctions are counterproductive is back to the fore. Sanctions against Iran are considered counterproductive because they provide the current Iranian regime with an excuse to blame the US led sanctions for Iran’s difficult economic situation. They also give a justification for the aggressive posture of the Iranian government against the US, and its refusal to engage in dialogue. 

The argument that sanctions against Iran don’t work raises two issues. First, it is important to be specific regarding what type of sanctions are in place, and against what/whom are they directed. And second, what do these sanctions aim to achieve. The era of heavy sanctions seems to be over, and now the talk is all about the so-called “smart sanctions”. These sanctions target specific individuals and their businesses—particularly the Iranian Revolutionary Guard Corps, whose members, by making use of their privileged position, now dominate the Iranian economy. The US Treasury Department has also been targeting specifically the IRGC due its companies close support to the proliferation programme.

As Afshin Molavi from The New America Foundation recently explained to me, in great part as a result of the current sanctions, it is now more difficult to do business in Iran. It is not only IRGC’s companies that are under pressure in Iran. Commercial enterprises in general now face enormous difficulties, especially in securing credit for small trade or large deals. Iran’s commercial growth has slowed down substantially, and sanctions are playing a role in this. And against the argument that the Iranian people will side with the regime, Iranian businessmen are aware that it’s their government’s fault. Sanctions will not overthrow the Iranian regime, but this is hardly the result Americans expect. Yet, smart sanctions not only hurt the intended targets, but also send a strong message of disagreement about Iran’s nuclear intentions, and are thus an important tool for a more muscled diplomacy.

As Molavi told me, “the current sanctions regime is still limited in its results. Its about the oil, oil is the real vulnerability, and as long as there’s someone buying Iranian oil…China is key then”. And he added, “60% of Iran’s crude oil exports go to Asia.” The importance of China does not lie only in that it is the largest recipient of Iranian oil exports. Iran is in desperate need to reform its oil business infrastructure, otherwise it seriously risks losing its capacity to export oil, the lifeline of the Iranian economy. As far back as 2005, Kenneth Pollack and Ray Takeyh wrote in Foreign Affairs, “The National Iranian Oil Company estimates that $70 billion is needed over the next ten years to modernize the country’s dilapidated infrastructure and is counting on foreign oil companies and international capital markets to provide approximately three-quarters of those massive investments.” Since then, Iran has barely made any progress in this crucial enterprise.

Do sanctions work? The smart sanctions on Iran have worked, at least to a degree. After another round of failed negotiations and new defiant declarations by Ahmadinejad, Russia has been convinced that sanctions are the way to go. To achieve an Apartheid-like economic isolation, the key for the US is to convince China to participate in the sanctions regime and to look for oil elsewhere. The prospects of this happening do not look as grim as one could expect. According to a recent report of the International Crisis Group, “While China resists tougher UN Security Council sanctions on Iran, it is likely to ultimately come on board but will seek to delay and weaken the West’s desired measures.”

Manuel Almeida