With Donald Trump exiting the White House on January 20, several of his policies are set to conclude. Amongst these is his maximum pressure campaign against Iran. Two years after reinstating sanctions on Tehran, the strategy has mainly failed to provide the desired effects.
Donald Trump never hid his stance on the Joint Comprehensive Plan of Action (JCPOA) — aka the Iran Nuclear deal. During his 2015-2016 campaign, he repeatedly called the deal the worst ever made. He made it clear that the US, under his leadership, would first withdraw and subsequently renegotiate a deal with the regime.
Since the Iranian Revolution in 1979, the US has repeatedly imposed sanctions on Iran. However, the signing of the JCPOA meant that many were no longer permitted. This changed on May 8, 2018, when Trump announced that the US would withdraw from the Iran Nuclear Deal.
Shortly afterward, on November 3, 2018, Trump’s maximum pressure campaign, consisting of political, military, and economic instruments and the accompanying reintroduction of new sanctions, began.
The campaign aimed – among other things – at the Iranian economy, oil sales, the energy industry, shipping, banks, and insurance companies.
Secondary Sanctions
The application of secondary sanctions enhanced the effect and enabled the White House to threaten foreign commercial and industrial companies to sever business relations with Iran. In principle, it forces companies to choose either Iran or the US for business and financial transactions.
Iran’s most important Asian business partners and oil importers – India, Japan, South Korea, and Turkey – have drastically reduced their business relations with Tehran.
For example, Iran’s most important Asian business partners and oil importers – India, Japan, South Korea, and Turkey – have drastically reduced their business relations with Tehran, particularly in regard to oil imports, for fear of losing access to the US financial markets. China followed suit more or less with Trump’s sanctions but has not ceased economic transactions with Iran entirely.
China notwithstanding, Iran is essentially denied access to global markets, foreign investment, and new technologies. The implications are vast and include a decrease in GDP, high inflation, rising prices, and the decline in the rial’s purchasing power.
The Iranian rial has lost 50 percent of its value, while inflation increased to 30.5 percent in 2018 and 41.2 percent in 2019.
Iran’s gross domestic product decreased by 1.9 percent in the first half of the current financial year (March 20 to September 21) compared to the same period in the previous year. Forecasts project the 2020 unemployment rate of 12.2 percent will further increase.
Yet, despite the Trump administration’s repeated efforts to apply increased pressure via additional sanctions, Iran has consistently refused to return to the negotiating table and instead insisted that the US must end the sanctions first. Most importantly, a collapse of the Iranian economy has, so far, not occurred. Nor has the strain on relations between the state and its citizens, as reflected during the November 2019 protests, which did not grow into an all-out rebellion against the government.
One reason Iran has been able to keep its economy alive is its experience with sanctions, Djavad Salehi-Isfahani, an economics professor at Virginia Tech, explained in an interview with NPR. According to him, there was a “misunderstanding of the level of complexity of Iran’s economy and how good they are or how experienced they are with resisting sanctions.”
Nonetheless, Isfahani concluded that Iran’s economy “is not in good shape at all.”
Humanitarian Catastrophe
While the pressure does not directly reach the Iranian government, it affects the general population – an almost non-existent story in headlines. Sanctions have reportedly prevented drugs and medical supplies from being imported, including raw materials and equipment needed to manufacture medicines domestically.
Humanitarian goods are exempt from sanctions, yet the ban on business with Iranian banks and the reduction in the granting of certain medical export licenses by the US Treasury Department has created difficulties in Iran, according to Human Rights Watch.
The banking and licensing restrictions are all the more devastating amid the global Covid-19 pandemic that has hit Iran hard.
The banking and licensing restrictions are all the more devastating amid the global Covid-19 pandemic that has hit Iran hard and cost more than 50,000 lives as of December 5. Abdolnasser Hemmati, Governor of the Central Bank of Iran, even suggested on December 7, that US sanctions made it difficult for Tehran to buy a vaccine through COVAX. “So far, any methods to make payment and transfer the required currency have faced obstacles due to the inhumane sanctions of the US government and the need to obtain permits from OFAC,” Hemmati stated.
Closer to the Nuclear Bomb
The impact of the current US sanctions against Iran has not merely been limited to the economic and humanitarian fields. The JCPOA aimed to limit Iran’s nuclear program. With the US’ withdrawal and the resumption of sanctions, Tehran began a gradual breach of the deal’s conditions in 2019.
A recent report even states that Iran has been in material breach of its obligations, with profound implications.
The resumption of its program has shortened the breakout time for Iran to build an atomic bomb. However, the International Atomic Energy Agency (IAEA), which oversees the deal, says Iran is not pushing its nuclear work as fast as possible, arguably to keep a door open.
Although Iran has violated many of the agreement’s restrictions, it continues to work with the IAEA and grants access to inspectors under a nuclear inspection system in alignment with the JCPOA.
Ultimately, the US’ withdrawal from the JCPOA has been counterproductive, according to Richard Nephew, Non-resident Senior Fellow at Brookings.
“Iran is manifestly closer to being able to produce a nuclear weapon than they were two years ago.”
“Iran is manifestly closer to being able to produce a nuclear weapon than they were two years ago,” Nephew, who participated in negotiations on the JCPOA, told Inside Arabia.
Meanwhile, a positive aspect of Washington’s sanctions has concerned Iran’s destabilization measures in the region. Iran is accused by the US, Israel, and the Arab Gulf Quartet — the UAE, Saudi Arabia, Bahrain and Egypt — of being the world’s biggest sponsor of terrorism. The US State Department reiterated this notion when it concluded on November 1, 2019 that Iran spends $US1 billion annually on its proxies.
Due to the sanctions, the falling oil price, and the pandemic, Iran has had to revisit its priorities. As a result, Tehran’s funding for paramilitary groups, for example, has reportedly decreased by millions of dollars.
The cutback has opened up the possibility of an Iranian retrenchment from Syria, a primary goal of the Trump administration. Iran had already reduced support for the Bashar al-Assad regime in Damascus and other allied militias in Syria.
Nonetheless, the Trump maximum pressure campaign, at this stage, cannot be labeled a success. Iran has not returned to the negotiating table, nor has it entirely ceased its aggressive interference in the region. Instead, the sanctions have been severely detrimental to everyday Iranians. However, the pressure has only been applied for two years, and it is difficult to assess what a second Trump term would have meant for Iran’s economy and government.
With Joe Biden coming into office, it appears as if the previous two years of Trump’s campaign were only a display of power, but without any lasting effect on the threat Iran continues to pose to its adversaries.
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