It is by now common knowledge that
Western-imposed economic sanctions on Iran have
had detrimental impacts on the Iranian economy.
Iranian officials have long since shifted their
public statements from outright denial to explicit
acknowledgement of the effect of sanctions on
Iran's economy, conceding that sanctions were
partly to blame for Iran's recent currency
depreciation as well as its rampant inflation.
Still, debate about the extent of the
sanctions' impact continues. Western media outlets
have reported a loss of over US$50 billion in
Iranian oil revenues over the last year, an
estimate Iranian officials have so far been
reluctant to acknowledge. (According to some
sources, Iran's petroleum minister recently
reported the loss of around $40 billion in oil
revenues over the last nine
months, but a ministry
spokesman swiftly dismissed the report, indicating
the controversial nature of the issue.)
Whatever the sanctions' actual
effectiveness, they have won the praise of Israeli
officials who have generally been skeptical of the
effectiveness of non-military options towards
Iran. Heartened by Iran's recent sharp currency
depreciation, the Israeli Finance Minister Yuval
Steinitz last September even went so far as to
characterize the Iranian economy as on the verge
of collapse.
It is safe to conclude that
sanctions have partly contributed to the sharp
rise in the price of commodities and other
consumer goods in Iran, thus eroding the general
welfare of ordinary Iranians and threatening
further economic hardships down the road. In the
longer run, Western-imposed sanctions may also
significantly undermine the capacity of the
Iranian government to provide public welfare
programs and other social services by cutting its
revenues and hindering its ability to import
necessary foodstuffs and medicine.
Although Western sanctions were initially
advertised as "targeted" and "smart" - aimed only
at disrupting Iran's nuclear procurements and
denying it financing for its alleged nuclear
weapons program - it has become increasingly
difficult for Western officials to sweep under the
rug the indiscriminate and "dumb" nature of their
sanctions. The extent and depth of the sanctions
reveal that they are geared toward inflicting
economic hardships on ordinary Iranians in the
hope of inciting public discontent and possible
revolts.
But whether these crippling
sanctions will meet their ostensible political
goal of changing Iran's nuclear posture is a
different story. Finding itself the target of an
economic onslaught of unprecedented scale, Iran is
pursuing its own three-pronged strategy to survive
and emerge victorious. This strategy consists of
economic, diplomatic, and psychological
dimensions.
On the economic front, Iran's
strategy is geared toward minimizing the adverse
effects of sanctions on the general population.
For example, anticipating the US plan to impose a
gasoline embargo, the Iranian government moved in
advance to produce extra gasoline domestically by
shifting the operations of a number of its
petrochemical complexes to gasoline production.
Iran also adopted price measures to effectively
curb domestic gasoline consumption.
In
other areas, Iran's economic strategy has taken
the form of government intervention in the market
to regulate and control prices. The recent action
by the Iranian government to establish a parallel
currency exchange center was meant to stifle
further currency depreciation by providing
alternative sources of foreign currency supply for
imports and other needs.
In future crises,
it is expected that the Iranian government will
intervene more forcefully in the market by taking
over some economic activities, imposing stricter
price regulations, and if push comes to shove,
rationing essential commodities. To these
measures, one should also add a variety of
initiatives to curb inessential imports, encourage
domestic production, and when possible bypass the
sanctions altogether.
On the diplomatic
front, Iran has left the door open for a
face-saving compromise over its nuclear program.
Although it is unimaginable that the Iranian
government would compromise its core right of
nuclear enrichment, Iran possesses the necessary
bargaining chips to achieve at least a partial
removal of the sanctions. Suspending its
20-percent nuclear enrichment activities,
providing for further transparency in cooperation
with the IAEA, and implementing the IAEA
Additional Protocol are among these.
On
the psychological front, Iranian officials
understand that the objective scope of economic
hardship is less important than how it is
perceived by the general public. Iranian officials
have made their best effort to convince Iranians
of the logic of their resistance against Western
pressures and to encourage them to make sacrifices
in the face of sanctions-induced economic
hardships.
As I have noted elsewhere, the
official narrative is that economic hardships are
the price that the Iranian people need to pay to
safeguard their political independence. Western
demands on Iran's nuclear program are presented as
illogical and discriminatory and thus worthy of
resistance. Adopting this attitude naturally
defines a higher tolerance threshold for average
Iranians in the face of increasing economic
hardship.
Finally, the self-sustaining
nature of Iran's economy (which is capable of
producing most of its own commodities and consumer
durable goods), Iran's geographical location
(which provides numerous outlets to the outside
world and gives Iran influence in the strategic
Persian Gulf), and its political influence in the
greater Middle East (which lends it a degree of
deterrence from Gaza to Afghanistan) all seem to
give Iranian officials confidence that they will
be able to weather the storm.
Abolghasem Bayyenat is an
independent foreign policy analyst covering Iran's
foreign policy developments. His earlier
commentaries and articles can also be accessed on
his own website at
http://www.irandiplomacywatch.com/
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