Daily Times

As foreign policy tools, sanctions have been most favourably used by policymakers in Washington, to deter the menace of terrorism and conflict, particularly in the Middle East. The history of sanctions showed that up to 2019, more than 8,000 sanctions were imposed on several countries, groups, individuals and organisations. In this regard, the American Treasury Department suggested that the list of sanctions began from “Balkan to Zimbabwe.” For policymakers, economic sanctions have become the tools of choice to respond to major geopolitical challenges.

Serious Middle East watchers think that the current Iran-US escalation entails several implications for the region. In the backdrop of the accelerating crisis, the American drawdown from this region appears to be remotely possible. This article argues the US has exercised several options regarding Iran, for instance, containment, regime change and denuclearisation. Yet, there has been no major change in Iranian behaviour. Therefore, this article attempts to understand the “sanctions paradox” in Iran-US relations.

Melting of Iran-US Relations

Iran and the US have seen highs and lows in their relations since the 1980s. Currently, their relations got deteriorated when the US blamed Kataib Hezbollah for firing a rocket on one of the US defence contractors in Iraq in December 2019. In the wake of these incidents, the US responded with a token of airstrikes in Syria and Iraq. Iran reacted angrily by swarming the US embassy in Iraq. On January 3, 2020, their relations further escalated after the killing of General Qasem Soleimani in Iraq. He was considered to be a prominent figure and said to have ruled the hearts and minds of the Iranian people. Consequently, after his killing, the reaction was obvious. Iran retaliated with rocket fires at American military bases, located in Iraq. No major causalities were reported. Restraint partly worked on both sides. A low level of conflict cannot be ignored. In the 21st century, the style of waging wars has changed. No country could afford or continue with prolonged and futile wars in other/volatile regions.

Among the several strategies, sanction policies have always been at the heart of all previous governments of the US. To impose sanctions (on one pretext or the other) has been one of the ideal tools for the US administration. Even Donald Trump’s team has also been relying on sanction strategies because they believe they could be the best instruments to bring the targeted country to their terms and conditions. So far, they have imposed a severe nature of sanctions against Iran. These sanctions have either been against individuals or regimes or their exports and imports, infrastructure development of Tehran in the region. It seems like American constant push in the form of “all sticks but no carrot” policy has appealed less to an international community. Nevertheless, perceptions are tilting towards the victim or targeted country.

Sanctions, either economic or political, are considered to be a significant tool with which governments claim to have leverage.

Geopolitical analysts observe that Trump’s policy appears to be uncertain, less coherent and unpredictable. It is feared that his approach might lead to war with Iran in the region. Such a scenario could be horrible and devastating at a time when the US administration is mulling over withdrawal from the region. Currently, it has applied a “maximum pressure” strategy against Iran. By doing so, they are expecting options like more severe sanctions and regime change.

Impact of Sanctions

From 1979 to the 1990s, sanctions have been the main strategic devices in the hands of the US successive regimes to coerce or pressurise Iran to their terms and conditions. The purpose of these sanctions was to stop Tehran to sponsor or support alleged terrorism or nuclear network. However, it limited Iran’s options to continue with their agenda or support certain groups in the Middle East. Moreover, the US, along with the UN, persuaded Iran to stop or roll back its nuclear program in 2010 and 2015. Conversely, sanctions have emboldened Iran and have criticised American adversaries and allies too.

In reaction to Trump’s sanctions against Iran, Hassan Rouhani (President of Iran), expressed in an assertive tone, “Tehran will neither bend nor come under American threats.”

Even the International Atomic Energy Agency (IAEA) has been saying, in its official parlance, that Iran is complying with its terms and conditions. Similar is the case of American allies in Europe. They have shown a concern that their companies, which intend to trade with Iran, are being threatened by the US. Several European business companies have left Tehran. There is no second thought that Iran is facing the worst crisis in its history. But experts still believe the crisis of a country cannot be linked with its collapse. In this regard, one of the Iranian experts at Eurasian Group, Henry Rome, succinctly pointed out, “Iran is, no doubt, on the verge of crisis, but still posses food and medicine to feed and survive. Although its past has not been good. At this time, it cannot be concluded that it is on the verge of collapse.”

It is evident from the previous US governments that their sanctions strategy against Iran has partly, but not completely, failed to change Tehran’s behaviour. These sanctions, indeed, affected in the sense that Iran has failed to address its issues at home. Its strategic goals in the region appear to be on the decline. With the growing pressure from an international community, for instance, in the years 2012 and 2015, the Iranian economy was receding while reducing crude oil export to 50 per cent. At the same time, it had reduced access to its assets of $120 billion in foreign countries. Due to this, Iran believed to have agreed in part to the Joint Comprehensive Plan of Action (JCPOA). Due to the waiving of American sanctions, a few executive orders were revoked, which resulted in the lifting of the UN as well as European Union sanctions against Tehran. In this way, Iran was able to enhance its export of oil, attracted foreign investment, accessing its foreign reserve. These steps inevitably boosted the economic growth of Iran up to seven per cent in 2016 and 2017.

It was in the interest of European countries to preserve the JCPOA agreement. They believed they could pressurise and persuade Tehran to be in the loop of a nuclear deal. The EU decided to accelerate its trade and investment with Iran by introducing a Special Purpose Vehicle (SPV) in January 2019. Its main purpose was to offer Iran $15 billion in credit. This was expected to be done through oil supplies to Europe. Nevertheless, this strategy was expected to side-step the secondary sanctions, which were hitherto imposed by the US. After 2017, the European trade had increased with Iran to the volume of $23 billion. Most of these deals are linked to energy. One can imagine that scraping agreement like JCPOA, Iran can easily walk away from this deal. It will affect Europe more in terms of energy supplies, trade and investment in Iran. In this way, sanctions on Iran are dividing even American allies and friends in the world. Major trading partners like China, India, East Asia, South Asia and some European countries are closely watching these developments.

Understanding “Sanctions Paradox”

Sanctions, either economic or political, are considered to be a significant tool with which governments claim to have leverage and can put heavy pressure to show their disapproval of other countries. Economically and politically, the governments understand the costs of war and replace it with economic sanctions. To them, these sanctions are not substantial. They argue sanctions leave a huge impact on the sanctioned country. Hence, governments apply sanctions as a popular tool of pressure rather than preferring military incursions.

In addition, Daniel W Drezner, an American Professor of International Politics, raised one of the very important questions regarding sanction’s effectiveness and viability. He argued in his book (1999),

“Both imposers and targets of economic coercion incorporate expectations of future conflict as well as the short-run opportunity costs of coercion into their behaviour. The conflict expectations have a paradoxical effect. Adversaries will impose sanctions frequently but will rarely secure concessions. Allies will be reluctant to use coercion, but once sanctions are used, they can result in significant concessions. Ironically, the most favourable distribution of payoffs is likely to result when the imposer cares the least about its reputation or the distribution of gains.”

Hence, it makes sense that more sanctions or maximum pressure against Iran might lead to achieving less after the American exit from the JCPOA. In this time, American-imposed maximum pressure tends to be unproductive given the delicate nature of its alliance with Europe and the UNSC. In this way, Iran could be emboldened, and its energy sector could revive and survive. It will have a minimum impact on Tehran. The current situation in the Middle East region is different from what it was perceived in 2013 in which Iran was brought to the dialogue table. In those times, two things were visible: the US had strong coalition partners, and the damage was maximum to the targeted country.

Conclusion

The critics’ narrative on sanctions on Iran is getting wider currency in the regional and global parlance. As explained above, more than 8,000 sanctions have been imposed by the US in the world up to 2019. The current “maximum pressure” against Tehran might be counterproductive and has chances of conflict in the future. The conflict dynamic could be different as the US is heavily overstretched around the world. The use of sanctions, as a foreign policy tool, to bring any country, including Iran, to American terms and conditions, has irritated even the US’s allies and friends in the region. Here, the paradox of sanctions needs to be understood in terms of gains and losses. The American coalition and its sanctions policy are effective when there is no loss to her coalition partners while imposing sanctions on the targeted country. In this paradox, a country, which imposes sanctions has no loss. Conversely, if there is a loss of gains for the coalition partners then it is likely that sanctions can not be effective.

In this matrix, America’s most favourite foreign policy strategy, for decades, has been to impose sanctions. This policy does not result in their loss. They consider it an effective and risk-free tool. They want to get more concessions with minimum costs. If there is a sense of realisation (among the American allies or coalition partners like EU) that imposing sanctions on Iran would bring more losses to coalition partners, these sanctions could be ineffective. In this unequal powerful partnership, the targeted country gets stronger. They get time to revive, survive and prioritise their interests. In such a deteriorating scenario, a conflict cannot be evaded for which Washington seems to be reluctant in exercising a military option against Tehran. The one-million-dollar question remains: how much is too much for the US in its ties with Iran?

The writer has been writing for International Public Policy Review Singapore since 2017. His academic research articles have also appeared in the International Journal of China Studies, Journal of History Politics, and Strategic Studies (Malaysia) and the Government Journal, SU, Jamshoro (Pakistan). He is a PhD candidate at the Department of International and Strategic Studies, University of Malaya.