Elliott Abrams

Pressure Points

Abrams gives his take on U.S. foreign policy, with special focus on the Middle East and democracy and human rights issues.

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Are Iran Sanctions Working?

by Elliott Abrams
February 21, 2013

It’s a commonplace to say that sanctions against Iran are tighter than ever and are working. Here’s an example from White House spokesman Jay Carney last Fall: ”We have diplomatic isolation and international isolation that’s unprecedented in history and it’s having a profound impact on both the Iranian economy and the Iranian regime’s internal political structure.”

The problem is that sanctions appear to be having no impact on Iran’s nuclear weapons program, which is after all their purpose. Impoverishing Iranians is not the goal.

The damage to Iran’s economy is visible: oil exports are down (though because oil prices are up, the impact of this is reduced); the currency has fallen in value by about two-thirds against the dollar; foreign exchange reserves are apparently down from about $100 billion to perhaps $75 billion.

But that is not economic collapse. A foreign ambassador stationed in Iran recently told me that the depressed value of the currency means, for example, that a middle class family used to an annual vacation in Turkey can no longer afford to take that trip. They now have to vacation inside Iran. But as he noted, that’s hardly the kind of thing that produces rioting and it isn’t going to produce a change in the Supreme Leader’s nuclear policy.

Reuters‘ Middle East economics editor recently wrote that sanctions “are not close to having the ‘crippling’ effect envisaged by Washington. The Iranian government has found ways to soften the impact, and Iran’s economy is large and diverse enough to absorb a lot of punishment.” He noted that “The International Monetary Fund estimated in October that Iran would post a general state budget deficit of 3.9 percent of gross domestic product this year – easily bearable for a government with gross debt of only about 9 percent of GDP.” Moreover, “government subsidies and handouts are expected to continue softening the impact of inflation on Iran’s poorer families by keeping staple foods such as bread, rice, sugar and edible oil affordable for them. Parliament agreed last month to allocate a further $2 billion to support low-income families.”

So sanctions are hurting Iran’s economy, and are hurting many Iranians–though the richest can take care of themselves, and the poorest are protected by the government. But there is no crisis, and it seems to be wishful thinking that the ayatollahs will abandon their nuclear program because the economic pain, and the political risk it is producing, are too great. That could happen if sanctions–especially sanctions that reduce Iran’s oil exports a good deal more and interfere with its ability to import refined products–are strengthened. But that does not seem to be in the cards.

Post a Comment 5 Comments

  • Posted by Len Singer

    Even if sanctions were substantially tightened and all of the waivers and exemptions eliminated, the example of North Korea seems to indicate that Iran’s leadership would not be likely to modify their desire to become a nuclear power.

  • Posted by armchair

    So after decades of sanctions against a now nuclear bomb armed N Korea, the think tank people decide, in Feb 2013, to question if sanctions work?

    My view of think tank people is the same as any high school: opinion leaders: thought police…with conclusions based and policies based on defenseless false foundationless assumptions…and everyone else who either buys in or is shown the door.

    EG: war on terror…in fact the other side is waging: “a war against free speech to criticize Islime”…we wage a war on the foot soldiers sent by their: “dictators that parade as religious”….

    I am right and can defend that position from all your invalid objections; but it is outside your think tanks narrow-tive; so I get called names or maybe just the nose…but my presentation of the actual market conditions remains correct.

    Sorry I do not have Milton Friedmans masterful ability to disagree without sounding/being disagreeable…I wish I did…

  • Posted by Richard Huber

    I continue to be puzzled by the US’s extreme concern about Iran’s nuclear program. We have learned to live with India, Pakistan and now North Korea as nuclear states, what’s so different about Iran?

    Oh, that it’s an enemy of Israel! Now I get it.

    But our willingness to tolerate an Israel that is estimated to have an arsenal of around 200 atomic bombs, refuses to join IAEA, sign the non-proliferation treaty or even admit that it has this arsenal makes our stance on Iran’s program seem very hypocritical.

    Perhaps we should re-examine our position re this program and maybe learn to live with it as we have with several others.

  • Posted by Elliott Abrams

    Thanks for reading the blog. I would argue that there’s a different answer to “what’s different about Iran?” It is that Iran is (according to the United States government) already, and without the additional strength nuclear weapons would give it, the world’s largest state sponsor of terrorism, and has indeed killed hundreds– actually, thousands–of Americans directly and indirectly. And it is that Iran is the only UN member state that continually threatens and promises to eliminate another member state.

  • Posted by Jonh

    Iran has NOT directly or indirectly killed thousands of Americans. In contrast our friends in the Gulf have directly and indirectly contributed to thousands of deaths in Afghanistan,Iraq,Pakistan,India,Syria,Libya,etc…

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