I have to admit that imposing sanctions on a country recognized as a bad actor in regional or international affairs is appealing.
Let’s punish the bastards and make them change their evil ways!
But have you thought about who really gets hurt? And if sanctions actually work?
Let’s use Iran as an example because President Donald Trump re-imposed U.S. sanctions on the Middle East country Aug. 7.
The Iran regime vs. the Iranian people
Sanctions cause instability in a country’s economy (as I broke down in my last video).
Iran’s regime consists of the unelected Supreme Leader, Ali Khamenei, the Guardian Council, and the Revolutionary Guard Corps.
Did you know that Iran’s regime owns 60 percent of the economy through state-controlled enterprises?
Their enterprises aren’t feeling the same economic pressures that are squeezing the other 40 percent of businesses in Iran.
Islamic scholar Hamid Entezam tells GV Wire: “The Clerical Regime in Iran has lived in relative isolation since its inception. Isolation is a two-sided phenomenon; it deprives a nation from outside assistance or interference. Therefore, the outside world has limited influence to alter the regime’s behavior.”
During sanctions, the regime restricts subsidies on food staples, electricity, water and gas to preserve resources. Thus those inside the regime still benefit while many Iranian citizens can barely afford meat among other necessities.
During the 2012 Iranian sanctions, for example, the price of chicken increased 30 percent and the price of vegetables went up 100 percent.
During Saddam Hussein’s rule in Iraq, comparable sanctions were imposed on Iraq and the effects were similar.
Trita Parsi, president of the National Iranian American Council in Washington, D.C., famously used this analogy: “The last chicken sandwich in Iraq would always be eaten by Saddam Hussein himself. During imposed sanctions, the rulers of the country will be the last ones to feel the pain of sanctions.”
During the 2012 Iran sanctions, unemployment increased to 35% because of layoffs stemming from the inability to import necessary goods and raw materials.
But most in the regime kept their jobs and had no problem putting food on the table. The regime funneled economic resources to its base of support.
How Sanctions Affect Currency
The Iranian rial value fell and decimated the life savings of many Iranians.
The sanctions also obstructed the transfer of money to foreign banks. With the depreciation of the rial, a high demand for the U.S. dollar resulted. This was due to the need to pay for foreign expenses and to protect the value of Iranian savings before the rial became completely worthless.
The regime’s reaction to the increased demand for the dollar was to order the Iranian Central Bank to impose a limit on the supply of foreign currency to individuals. This eventually led to banning any Iranian from trading rials for dollars and ultimately created a regime influenced black-market foreign currency exchange that was almost twice the price of the official rate.
However, the regime still had access to trade the rial at the official rate and pocketed the profits from the black market while sending many Iranians into destitution.
How to Effectively Deal With Rogue Nations
Sanctions that are imposed on a country are an injustice to the people who have little to no influence on the regime’s bad behavior. The citizens bear the brunt of the sanctions while the country’s regime (whose behavior caused the imposed sanctions) moves forward with few, if any, penalties.
Hamid Entezam, the Islamic scholar, offers an alternative to the imposed U.S. sanctions in Iran.
“The best the West can do is restrain the regime’s adventures overseas through a carrot and stick approach and put pressure on Iran to respect human rights and political dissent. This can be achieved by sanctioning the rulers — not the subjects — as Trump is doing today.
“This type of sanction will be welcomed by the Iranian people and will create greater breathing room for grass-roots efforts to advance democracy inside Iran.”