The reimposition of economic sanctions following the 2015 nuclear deal directly impacted Iran's economy, seemingly causing it to shrink 9.5 percent in 2019.  Following the assassination of Qassem Soleimani, and Iran's retaliatory strike on a U.S. Army base in Baghdad, Trump increased sanctions substantially.  This, in turn, limits Iran's ability to fight back against the targeted killing of Soleimani. 

The Situation in Iran

Iran, an already isolated country, is increasingly becoming an outlier in the international community.  Iran is a country where clerical and civil leaders are usually at odds with one another, and the conflict ultimately affects ordinary Iranians.  Generally, clerical leaders like Ayatollah Ali Khamenei are faithful to the 1979 Islamic revolution, and civil leaders like President Hassan Rouhani favor a slightly more progressive path.

Internationally, Iran has been something of a pariah.  In fact, the 2015 nuclear deal appeared to be a turning point in international relationships, with blue skies ahead, especially as far as the United States was concerned.  But renewed economic sanctions after the deal's collapse led to widespread protests in the country and re-appeared toward the end of 2019.  The government arrested about 7,000 dissidents, many of whom were flogged or imprisoned.  Often, these were protests regarding the economy or unpopular government policies such as the public hijab requirement.

There is no doubt that Iran has already been feeling the ramifications of the sanctions.  Iran is already in a deep recession, oil exportation has dropped, inflation is high, the cost of living has increased, and the rial has halved. 

In terms of oil exports, Iran was selling 3.8 million barrels per day, and today it is down to 1 million, leaving the government with a loss of billions of dollars.  Inflation is a serious concern in Iran.  The official Iranian rial-to-dollar exchange rate is 42,000:1.  But on some currency exchange websites, the rate is as low as 115,000:1.  In terms of the rising cost of living, it is said that the sanctions have led to higher food prices, leaving Iranian citizens buying rotten food and small amounts of food.  Due to the dire economic situation, Iranian citizens are furious with their government and demand change. 

The recent International Monetary Fund forecast echoes an earlier prediction from the World Bank.  By the end of 2020, they predict that Iran's economy will have shrunk by 90 percent.  Economic sanctions are taking a toll on the economy and are ultimately affecting the nation's ability to sponsor terrorism, as well as retaliatory attacks against the U.S.  In addition to oil exports, which are the backbone of Iran's economy, other sectors are hurting.  This is a win for the U.S., as the sanctions are proving to assist in counter-terrorism efforts while also bringing down an enemy in the hope for change. 

Economic Sanctions: A Brief Overview

Economic sanctions against Iran have made an unstable country more unstable.  But can they bring about change?  The relevant historical record suggests the answer is "yes."

Altering the course of nations is never easy, quick, or cheap.  In fact, sometimes the costs of economic sanctions outweigh the benefits.  But in most other situations, the opposite is true.  Former American president Woodrow Wilson said, "A nation that is boycotted is a nation that is in sight of surrender.  Apply this economic, peaceful, silent, deadly force and there will be no need for physical force.  It does not cost a life outside the nation boycotted, but it brings pressure upon the nation which, in my judgment, no modern nation could resist."  Time and again, he has been proven right.

In the summer of 1921, Yugoslavia, the newly formed Slavic super-state, looked to expand its territory at the expense of tiny neighboring Albania.  Threatening economic sanctions was enough to make Yugoslavia back down. 

In response to Apartheid in South Africa, all around the world, nations, corporations, and even individuals divested from South Africa, and sanctions were imposed by the Comprehensive Anti-Apartheid Act, passed by the U.S. Congress in 1986.  The sanctions drove many large multinational companies — along with their money and jobs — out of South Africa, eventually leading to the end of Apartheid.

Why Sanctions on Iran Are Effective

Iran is one of the world's most isolated nations and also one of its biggest bullies.  Since the 1979 Iranian Revolution, the theocracy has used proxy groups and covert government groups to carry out bombings against Iranian dissidents and defectors.  Iranian proxies that engage in terrorism include Hezb'allah and the Houthi rebels of Yemen, as well as smaller sleeper cells across Europe, South Asia, and Northern and Latin America.  Iran also uses its Iranian Revolutionary Guard Corps for acts of terror.  The IRGC has been known to plant agents in diplomatic missions, who then target rival countries' diplomats and tourists, as well as prominent Iranian dissidents. 

From Washington's standpoint, the two options when it comes to dealing with Iran are either economic sanctions or military action. Armed action would inflict collateral damage on innocent civilians more so than economic sanctions, especially on Iraq, Iran's troubled neighbor.

Critics of economic sanctions against Iran often over-rely on statistics and overlook the context. The Yugoslavia bully factor supports the imposition of strict economic sanctions. In recent years, one-party dictatorships in the MENA (the Middle East and North Africa) region have fallen like flies in what has been coined the "Arab Spring". Long-time strongmen such as Qadaffi in Libya, Hussein in Iraq, and Assad in Syria are all gone or hanging onto power by their fingertips. 

The aforementioned mass protests indicate that there is a similar hunger for change in Iran. The Iranian people are tired of being used in their government's games and want to be left alone to live and prosper, do business, and look after their families in peace. But President Rouhani and his overlords have an extremist vision for the country. The drone attack on Saudi Aramco oil fields, which were linked to Iranian extremists, are the latest evidence of this. Economic sanctions have already fueled discontent among the people and seek a leader who will listen to their demands. As sanctions appear to be effective and threaten to destabilize the current regime, the world could soon see the overthrow of President Rouhani, which will ultimately be a win for the U.S.