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The Utility of the Iran Sanctions

April 8, 2013 Topic: EconomicsSanctions Region: Iran

The Utility of the Iran Sanctions

They might not provoke major changes. But that's not their only purpose.

Economic experts say the West’s sanctions on Iran are serving to “cripple” the Islamic Republic’s economy. Yet, as the recent P5+1 talks in Kazakhstan remind us, talks are only likely to serve as a stalling tactic for Iran. Sanctions may have set back Iran’s economy, but they have failed to alter its decision to pursue a nuclear program and are unlikely to do so.

On the other hand, while the central goal of the Iran sanctions is to end its nuclear program, this needn’t be the only goal. Another could be to erode Iran’s non-nuclear national-security capabilities. Press and policy makers often lose sight of Iran’s continually expanding, and now global, Qods Force network and its military’s ever improving anti-access/area-denial capabilities. These abilities to project power can be used to pressure neighbors. And sanctions can continue to blunt these lethal arms of Iran’s foreign policy while further isolating the regime.

Iran’s economic or societal tipping point, like many events in history, likely will hinge on unpredictable waves of momentum against the regime, over which U.S. policy makers can have little impact. History indicates that, until Iran reaches that point, it is unlikely to reverse its nuclear program. Thus, as the next round of talks in Kazakhstan comes and goes, U.S. policy makers should remain patient and place confidence in the other ways in which sanctions are working—namely, in thwarting Iran’s goal of regional hegemony while demonstrating to the world the costs of attempting to cross the nuclear threshold.

Consider just the economic impact of the sanctions. Since 2012 Iran’s inflation has exceeded 100 percent; food prices have soared, doubling in some cases; its foreign-exchange reserves are depleted; unemployment, reported officially at 15.5 percent, is much higher, probably reaching close to 35 percent in the industrial sectors. Iran’s occasional economic mismanagement hasn’t helped, but sanctions have largely contributed to its current situation. Since the EU’s oil sanctions went into affect in July 2012, Iranian oil exports have fallen 40 percent. Given 80 percent of Iran’s economy is based in petroleum exports, not surprisingly GDP growth dropped 8 percent, and its economy will likely remain flat in 2013.

As Iran’s GDP has contracted, so have the government’s revenues. In October, President Ahmadinejad acknowledged that Iran’s budget was under pressure and parts of it were being cut by 25 percent or even zeroed out. And such budget reductions inevitably undercut Iran’s overarching goal of projecting influence in the region.

Ahmadinejad’s October announcement was one of the few instances in which details of Iran’s budget cuts have been revealed. Fortunately, analysts tracking Iran can deduce budgetary effects from what Iran does not say—notably, the lack of boisterous military exercises or publicized progress of weapon systems. Large-scale military exercises such as Velayat and Noble Prophet were intentionally ostentatious until July 2012, but since their scale has tapered off. Velayat in 2011-2012 spanned ten days and involved more than twenty surface ships and at least eight submarines. This year’s Velayat lasted only six days and involved, according to press accounts, only a few submarines and a smaller complement of surface ships. Meanwhile, this year’s Noble Prophet, the Islamic Revolutionary Guard Corp’s (IRGC’s) premier deterrent exercise often involving multiple military services, was underwhelming by most measures. It involved only the IRGC’s least-advanced service, its ground forces, and there was no demonstration of any meaningful deterrent capabilities. In the past, such exercises have focused Iranian media attention for several days on Iran’s key deterrent capabilities, including large ballistic-missile salvos coordinated with air strikes on mock U.S. bases .

The lack of announcements on Iran’s military advancements also suggests major delays or cancellation of weapons programs. Iran’s Hoot torpedo, capable of traveling at speeds up to 200 knots, was last displayed operationally in April 2006, during a Noble Prophet naval exercise. The Ra’d anti-ship cruise missile, reportedly inaugurated into a production line in 2004, would have provided a significantly longer range than any existing Iranian cruise missile. But it has not been mentioned or displayed since, and it seems likely it was cut at least in part due to funding constraints.

Sanctions also have degraded Iran’s soft power. Iran’s sanctions-induced economic downturn has made it increasingly reliant on the limited number countries purchasing its oil (e.g., China, India, South Korea, Japan, Turkey). This undercuts Iran’s ability to leverage economic soft power against them while rendering it vulnerable diplomatically to economic pressure. For example, Iran proved powerless to alter Turkey’s course in the ongoing Syrian civil war or to thwart its decision to accept NATO Patriot missile batteries. Meanwhile, efforts to isolate Iran economically have resulted in Iran’s diplomatic and informational isolation. France, Hong Kong and Spain banned several Iranian satellite channels and radio stations this winter, limiting Iran’s ability to project influence through its state-controlled media.

Sanctions also have prevented the sale of military and dual-use goods to Iran. The passage of UN Security Council Resolution 1929 in June 2010 led Russia to back down on its promises to sell Iran its advanced S-300 ground-to-air missiles, a major setback to Iran’s air-defense capabilities. Other such sanctions likely lead to various challenges, delays and costs for Iran in its effort to obtain technology and support for developing nuclear-weapons delivery systems.

 

History tells us that sanctions directed at an antagonistic regime generally achieve only modest policy goals. They rarely force major policy changes, especially against adversarial, undemocratic regimes. In fact, the Peterson Institute’s survey of 174 sanction case studies failed to find a single example dating back to 1914 in which sanctions caused an antagonistic regime to adopt major policy changes. But sanctions forced modest behavioral changes from rival regimes in 13 percent of the cases and disrupted militaries in 40 percent. If the United States and its partner nations accept more modest policy objectives, then they already are succeeding—even if Iran ultimately becomes a nuclear power.

This is not to say the United States should abandon its aim of preventing Iran from developing a nuclear weapon. But that needn’t be the only purpose of sanctions. The U.S. should campaign diplomatically for even greater sanctions against Iran at least to delay a nuclear Iran while also curbing various other forms of nefarious activity. That could serve three purposes: ensure an ongoing sanctions regime against Iran even in the event that it acquires a weapon (economic); preventing the enhancement of Iran’s conventional capabilities (military); and further isolating Iran as a pariah state (political). Regionally, such measures will help assure Arab allies in the Gulf that their energy infrastructure will remain unthreatened. Globally, it will demonstrate to future nations seeking nuclear weapons that such ventures come at a major cost economically, militarily and politically.

 

Bryan Prior is a Political-Military Analyst focusing on Iran at USCENTCOM. The opinions expressed are his own and do not represent those of the U.S. Government, its departments, agencies, or USCENTCOM.

Wikimedia Commons/ Marjan Shiva . FAL 1.3.