How Smart Are the Iran Sanctions?

by , September 15, 2010

In the face of the rising hysteria regarding Iran’s development of its nuclear power facilities, there is talk of preemptive military strikes against Iran. Meanwhile, sanctions on Iran – by both the UN Security Council and the United States – have become increasingly harsh. And to the extent they are successful, these sanctions will harm the wrong people and have little impact on the political leadership.

Yet another round of sanctions doesn’t seem to have caused Iran to buckle. After the Security Council imposed new sanctions in June, President Mahmoud Ahmadinejad compared the new resolutions to “a used handkerchief that should be thrown in the waste bin,” and Iran’s envoy to the IAEA said that Iran’s nuclear enrichment program “will not be suspended, even for a second.”

Such responses are not surprising. In general sanctions do not work, in any regard. Almost invariably, they impact the poorest and most vulnerable, while the political and military leaders are insulated from their impact. Although the United States often views itself as providing a kind of moral leadership by sanctioning other nations, that view is almost never shared by the targeted population. Instead, sanctions trigger resentment and resistance among the population and produce greater support for the government in the face of attacks from outside.

How Smart Is “Smart”?

The “smart sanctions” movement in the 1990s sought to focus on weapons, or the assets of political and military leaders, without harming the population as a whole. The U.S. claim to support only “smart sanctions” has certainly not been true with Iran. For example, the recent U.S. law refers to sanctions on Iraq’s oil and gas industries as “targeted,” as though this is a narrow measure that will somehow not impact the entire population of Iran. But these industries account for one quarter of Iran’s economy.

If the United States succeeded in shutting down the oil and gas industries, every aspect of life in Iran would be affected, far more than the impact of the 1973 Arab oil embargo on the United States. Eighty percent of the Iranian government’s income comes from the energy sector. The government’s extensive subsidies for food, gasoline, and housing – which, according to some estimates, account for over one-quarter of Iran’s GDP – depend on this income. The United States is essentially attempting to bankrupt the state.

There is nothing “smart” about such a strategy. A similarly shortsighted approach in Iraq reduced funds for the military, but also compromised all critical public services dependent on state funding. It led to layoffs of civil servants and the personnel staffing electricity generation, water treatment, and telephone systems. Teachers, doctors, educational supplies, and imported medicines for schools and health clinics were all at risk.

UN No Better

The sanctions imposed on Iran by the UN Security Council, for which the United States has lobbied aggressively, are not much of an improvement over the U.S. government measures. The appendices attached to Security Council resolutions, which list the names of individual persons and companies, imply that the impact will be narrowly targeted. But, in fact, it is not.

UN sanctions, for instance, targeted Iran’s Bank Mellat on the grounds that it facilitated financial transactions for military entities. But Bank Mellat is also one of the largest commercial banks in Iran, with over 1,800 branches and almost 25,000 employees. Bank Sepah, the fifth-largest bank in Iran, was also targeted, on the grounds that it “provides support” for Iran’s Aerospace Industries Organization. It’s as though Chase Manhattan Bank were prohibited from doing business, and had billions of dollars in international assets frozen, on the grounds that one of its clients is Sikorsky Aircraft, which makes military helicopters. This stands in marked contrast to actual targeted sanctions – for example, the boycott of Caterpillar, which makes the bulldozers that are directly used by Israel in the demolition of Palestinian homes.

The United States was also behind UN sanctions that target the Islamic Republic of Iran Shipping Lines (IRISL), on the grounds that it arranges shipments of cargo related to the military. But IRISL is also Iran’s national shipping line. According to the U.S. Treasury Department, IRISL is “a global operator” that “provides a variety of maritime transport services” of every sort, “connect[ing] Iranian exporters and importers with South America, Europe, the Middle East, Asia, and Africa.” And one-third of Iran’s GDP consists of exports. To compromise Iran’s major shipping lines would do damage far beyond blocking the transport of military items.

Iran’s wealth and ingenuity at circumventing the sanctions have largely insulated it against the economic disruption that the sanctions are intended to bring about. But this isn’t because the sanctions themselves are actually designed to avoid harming the innocent. To the contrary, they are aimed at undermining massive sectors of Iran’s economy, and to the extent that they are successful, their harm will be indiscriminate.

The Problem With Sanctions

Economic sanctions have long been a favorite tool of the United States. From the end of World War II to 1990, the United States imposed two-thirds of all global sanctions, often acting unilaterally. U.S. policymakers were attracted to sanctions because they seem more substantial than “mere diplomacy,” but without the risks and costs of military intervention. More importantly, this tool can do enormous harm to a country with a small or vulnerable economy and rarely contain the risk of reciprocal action against the U.S. economy (the Arab oil embargo of the 1970s was such an exception).

When Iraq invaded Kuwait, the United States pressed for the imposition of measures that would strangle Iraq’s entire economy. When these sanctions were accompanied by the massive bombing campaign in 1991, which destroyed or crippled Iraq’s infrastructure, from water treatment plants to roads and bridges, the result was a humanitarian crisis that never really abated. After the bombing, the sanctions prevented Iraq from restoring these capacities. Epidemics of cholera and typhoid continued for years. Malnutrition was widespread, and doctors had to treat diseases typically found in the poorest regions of the developing world. But, as with any economic crisis, the leadership didn’t have to suffer the worst of the hardships. The hardest hit were the most vulnerable – the poor, the elderly, the sick, and infants and small children.

Sanctions that affect the fundamental economy of a nation raise questions of basic justice. How was it that an institution of global governance could punish those least responsible for Iraq’s military actions and political decisions, while the nation’s political and military leadership, along with the economic elite, were insulated against these deprivations? In the face of the humanitarian catastrophe in Iraq, scholars and practitioners began formulating guidelines for “smart sanctions” – sanctions that would affect the political and military leaders without causing indiscriminate harm to the civilian population.

The U.S. measures against Iran, as well as those for which the United States aggressively advocates in international bodies, are no more ethical or persuasive than the devastating sanctions on Iraq. However much U.S. policymakers use lists of particular companies, or use terms like “smart” or “targeted,” these measures are designed to cause hardship and deprivation for the innocent.

Truly smart sanctions on Iran wouldn’t try to cripple the nation’s energy industry, the nation’s imports and exports, and the nation’s access to the global financial system. Smart sanctions would target things like equipment specifically designed to convert domestic nuclear energy facilities to weapons production. But while the punitive measures continue to expand, the most promising of the diplomatic efforts, such as the compromise shaped by Turkey and Brazil, have been broken off. There may be something better than sanctions, or there may not. But at the very least, the Security Council and the United States should not create a situation that is worse than doing nothing at all.

Reprinted courtesy of Foreign Policy in Focus.