Are Washington’s sanctions hobbling Iran?

March 11, 2015 11:04 AM (UTC+8)

 

Iran and the U.S. are busy playing a numbers game. But the sanctions that Washington’s stacked against Iran in the hopes of forestalling an Iranian nuclear weapon are not having their desired effect.

Word is that U.S. President Barack Obama would lift sanctions – imposed by White House executive order – if Tehran agrees to de-escalate its nuclear program for at least 10 years.

Iranian Foreign Minister Mohammad Javad Zarif has already ruled out a decade-long abeyance of the program. The most Iran’s government would agree to is less than five years.

Obama may also try to ease some U.S. sanctions against Iran to sweeten a prospective nuke agreement that would upset his Republican foes in the House of Cards. Sorry –  U.S. Congress.

Obama can lift or waive certain sanctions against Iran while he’s in office. He can also press U.S. allies to follow Washington’s lead. However, he doesn’t have the power to lift Congressional sanctions, which include some of the toughest against Iran.

U.S. legislators would likely play a key role in the fate of the Iran nuke talks if a clash developed with Obama over lifting permanent sanctions against the country – which requires congressional action.

This brings us to the question of whether ongoing U.S. sanctions against Iran are having any real effect.

Iran’s economy grew by 4% in the last two quarters of 2014. Inflation, which used to hover around 40%, fell sharply to 17%.

In my last visit to Tehran 6 months ago, the nation’s middle classes were clearly suffering, as was anyone whose livelihood was tied to Iran’s oil industry.

The impact of U.S. sanction’s on Iran’s oil industry has also stirred political and economic opportunism. As a very sharp mind in Tehran wrote me, “There are vested interests here who are against the (nuclear) deal for their own selfish economic reasons: people in high positions in the Sepah-e Pasdaran (Revolutionary Guards), and their allies and minions who benefit from the stalemate by having access to competition-free contracts in the oil and gas sectors, for starters.”

But more tellingly, Iran’s light manufacturing sector is thriving.

Mix less oil exports with a low rial and you have Iranian manufactured products – as well as agricultural products – very well positioned and becoming more competitive from Central Asia to South Asia, especially in India.

Made in Iran products – the Persian commercial answer to the Chinese “win-win” concept of being straightforward, practical and reasonably priced – are to be found in the bazaars of Central Asia, from Turkmenistan to Tajikistan, not to mention western Afghanistan, where Herat has been notoriously Iran-linked for ages. Even in the bazaars of Istanbul – as I saw earlier this year – the quite sophisticated Iranian textile industry has carved out a presence, comparing favorably with products made at higher cost in Turkey. Iran and India also have been trading for centuries, so there’s nothing more natural than seeing Iranian refrigerators and vacuum cleaners in Kerala imported via the Persian Gulf. Needless say,  this commercial feast is taking place outside the realm of the U.S. dollar.

Bottom line: U.S. sanctions are not “crippling” the Iranian economy.

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