Iran's Economy and the US Sanctions

By Amuzegar, Jahangir | The Middle East Journal, Spring 1997 | Go to article overview

Iran's Economy and the US Sanctions


Amuzegar, Jahangir, The Middle East Journal


Since the early 1980s, Iran's Islamic Republic has been under various US economic sanctions as a punishment for alleged international transgressions. During this period, the theocratic regime has moved forward on many economic fronts, but has been effectively held back in its efforts to reach the pre-revolution level of national prosperity. US sanctions have had a part in the setback, but not a decisive role.

While the regime may survive the enhanced sanctions, the economy is not likely to prosper without American and Western support.

since January 1984, Iran's economy has been under various US economic sanctions of increasing scope and intensity. Starting with a ban on the sale of American arms and dual-use technology, the sanctions gradually expanded to the present level with a total embargo on all bilateral trade and investment, and were even extended to secondary boycotts, penalizing foreign companies investing in Iran's oil and gas sector.

The economy's performance during the 13-year period has included some successes and many setbacks. Opposition groups have aggrandized the failures and blamed them on the regime's ineptitude, mismanagement, malfeasance, and corruption.1 Government officials, in turn, have accentuated their positive achievements, and attributed their shortfalls to matters beyond their control. Topping the list of the reasons for the regime's problems has been the "imposed" war with Iraq (1980-88), which was allegedly instigated by Washington. During that war, Baghdad is said to have been helped by American arms, intelligence information, and financial credit, while Iran was denied spare parts for its largely American-equipped armed forces. Global arrogance-a code phrase for the Washington-Tel Aviv axis against Iran-was repeatedly singled out as the root cause of Iran's economic difficulties.2

The purpose of this article is to review Iran's economic record and to examine the impact of US sanctions on the Iranian economy. There is no intention here to delve into several related but tangential issues3 such as the true global significance of the Iranian challenge and the appropriateness of the US response; the legality of US unilateral sanctions under the World Trade Organization's charter; the application of US jurisdiction to foreign companies outside America under international law; or the extent of Washington's rift with its allies and partners on the effectiveness of containment vs. dialogue.4 The focus here is on the sanctions' target and impact.

WHY SANCTIONS?

US coercive measures against the Islamic Republic have been advocated as a punishment for Tehran's alleged misbehavior. Washington has accused the Islamic Republic of attempting to export the Islamic revolution to other Muslim countries and promoting Islamic radicalism in such secular nations in the Middle East and North Africa as Algeria, Bahrain, Egypt, Jordan, Kuwait, Tunisia, Turkey, and others, through direct and indirect assistance to local militant Islamic elements. HAMAS (Islamic Resistance Movement) and the Islamic Jihad (Struggle) in the Palestinian Territories, Hizballah (Party of God) in Lebanon, the Shi'ites Freedom Movement in Bahrain, Al-Jama'a al-Islamiyya (Islamic Group) in Egypt, the Islamic Salvation Front (FIS) in Algeria, Hizb al-Mujahidin (The Party of Islamic Fighters) in Kashmir, Hizb al-Da`wa (The Call) in Iraq, and other assorted groups from West China and Central Asia to Morocco, Tunisia, Turkey and Saudi Arabia have been mentioned in the press as alleged beneficiaries. Tehran has also been accused of sponsoring or supporting international terrorism and subversion against its enemies and opponents.5 There have been blunt charges or dark hints in Washington's official circles regarding the Islamic regime's involvement in terrorist acts in Bangkok, Buenos Aires, Dhahran, Jerusalem, London, Paris, Tel-Aviv and elsewhere.6 Tehran's refusal to condemn HAMAS suicide bombers as "terrorists" has been cited as evidence of Iran's support for terrorism. …

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