HASHEM PESARAN, professor of economics, USC Dornsife.
This op-ed originally appeared in the Guardian on Sept. 17.
It is well documented that economic sanctions on their own have not generally been effective in achieving their political aims, particularly when they are imposed against non-democratic regimes. Sanctions have their greatest impact in the short term, as their effects tend to be mitigated in the longer term by structural economic and political adjustments. Overall, effective sanctions have been short-lived, whilst ineffective ones have lasted a long time.
In the case of Iran, sanctions started by the US over 30 years ago, initially targeting the oil industry, have now become much more sweeping, with other Western countries joining in. As sanctions have increased in scope and duration, inevitably they have also become more indiscriminate in their incidence and effects, with low-income households and vulnerable social groups in Iran suffering the most. Sanctions have been effective in weakening the Iranian economy, without as yet delivering any of their intended foreign policy goals. This can be largely explained in terms of the internal dynamics of how the different groups in Iran and the west react to the sanctions.
Within Iran, sanctions radicalize the extreme groups further and, by distorting the functioning of the markets, encourage economic manipulations that largely benefit those radical groups that are close to the regime. Such groups oppose any compromise that might lead to an easing of sanctions.
In the sanctioning countries, sanctions are justified, even if they end up producing widespread hardship and misery, on the grounds that they are better than wars. But as sanctions become more prolonged they tend to become even less effective in achieving their political objectives; the sanctioning countries consequently tend to impose additional, more extensive sanctions, which only promotes further radicalisation in both the sanctioned and sanctioning countries.
The only way to stop this vicious cycle is for both sides to negotiate in good faith and with open minds. Many western observers believe that recently elected Iranian president Hassan Rouhani is sincerely seeking a diplomatic solution. However, there are politicians and officials in the capitals of the P5+1 group – the five permanent UN Security Council members, plus Germany – who will push to implement even harsher measures if a diplomatic solution is not reached relatively soon. Witness the recent 400-20 vote in the US House of Representatives in favour of further punishing sanctions against Iran.
If Iran and P5+1 do not take full advantage of the current opportunity, the consequences are likely to be even more serious than if the status quo had simply gone unchanged. While the general international reaction to Iran’s new chief executive has so far been favourable, a lack of progress over the next few months could create new levels of frustration and desperation, bolstering the radicals on both sides in the sanctions/nuclear debacle and bringing us closer to military intervention with dire and unthinkable consequences. Israeli prime minister Benjamin Netanyahu is already spreading doubts about the utility of negotiating with Iran, arguing that Rouhani is a “wolf in sheep’s clothing”.
Iranian citizens, academics, and intellectuals can help. This is the message of the “civil movement” against sanctions that has been initiated by three prominent economists inside Iran, and I am pleased to be able to contribute my voice to this movement outside of Iran. It should be recognized that Rouhani won office in a lively, contested election, with a large margin of victory thanks to the majority of Iranians who prefer negotiation to confrontation. It is hoped that the wishes of the Iranian people will be respected by the Iranian government and by the west. Rouhani, his government, and Iran’s negotiating team as the representatives of the Iranian people deserve to be taken seriously and to be engaged with constructively.
Hurt by sanctions and economic mismanagement, the majority of Iranians have chosen a moderate politician to engage with western countries and to reach a diplomatic solution. Iran’s presidential election process is not ideal; nevertheless, this most recent vote was freer than the election processes in many Middle Eastern countries that enjoy the support of the west. Instead of demonstrating unswerving hostility towards Iran, it is vital for western countries to understand the situation and create an atmosphere that will help to further empower the moderates within Iran.
The P5+1 countries need to offer a deal to help Rouhani’s administration domestically and strengthen its ability to deal with the radicals inside Iran. Squander the current opportunity, and they will weaken Rouhani’s administration to the extent that it could fail, paving the way for the ascension of extremists. It is now up to the moderates on both sides to deliver.
Ordinary Iranians need to be part of the dialogue both inside and outside Iran. They need to remind their politicians of the heavy costs of living continuously under sanctions. It is not to Iran’s advantage to remain isolated from the global community. If Iran’s isolation continues, if it cannot trade freely and engage fully in international financial markets, if it cannot attract foreign investment, and if it misses out on technological advances that are taking place, the consequences could be many decades of decline and lost opportunities.
It is also clear that another costly, protracted, and open-ended military intervention in the Middle East is not in the west’s interest, particularly given the fragile state of the global economy and the recent troublesome political developments in Egypt and Turkey, the region’s other two most populous nations. A negotiated settlement with Iran holds the key to the resolution of political and military troubles around the Middle East.