The Iranian People’s Struggle Against Sanctions – “resilience economics” trumps “maximum pressure”

By Steve Bell

Since the inauguration of US President Biden, in January 2021, there has been an anticipation that the US government will reverse the decision of President Trump and re-enter the Joint Comprehensive Plan of Action (JCPOA), the agreement  reached between Iran, US, EU, China, Russia and the UN on Iran’s civil nuclear power development.  Though negotiations were long delayed, indirect talks in Vienna have resulted in a draft final agreement.

Yet since March 2022 the talks have been at a standstill.  The US President’s weakening popularity, and the belligerent character of US current policy, place a question mark over whether Biden will definitively reverse Trump’s policy. For its part, the Iranian government and people face the possibility of a worsening of the “maximum pressure” sanctions campaign imposed by Trump.  A formula may yet be achieved which overcomes the immediate impasse, but even that would only lighten, rather than remove, the burden under which the Iranian people are labouring.  Despite the rhetoric from US political circles, sanctions are aimed at the mass of the population as this article sets out.

A fearful burden has been imposed on the Iranian people for over forty years, and could yet be worsened.  The EU and the British government have allowed themselves to become complicit in this crime. 

The historical evolution of sanctions

To understand the role and legality of sanctions requires an historic examination – both of their general evolution and their specific utilisation against the Iranian people.  The latter issue will be examined later. 

The coercive acts of sanctions have their foundation in the evolution of capitalism towards its highest stage, imperialism.  Conflicts between states were an inevitable adjunct to the growth and global expansion of the capitalist mode of production.  State powers freely utilised their military powers to subjugate less developed economies, and against commercial rivals.  Attempts to contain and rationalise armed conflict between the rising capitalist powers led to international efforts to legislate the conduct of wars, and to seek international alternatives to wars.  In the 19th century, the contending empires in Europe and North America convened negotiations to regularise conflict.

As Karma Nabulsi explains:  “The general project of the modern laws of war was driven by the ambition to introduce internationally recognised legal conventions into the practices of war itself.  This goal was to be achieved by codifying existing customs and practices of armies with the aim of mitigating, standardizing, and thus stabilizing the conduct of war.  As a French military jurist explained: ‘Our goal here is to humanize war, by which we mean that it must be regularized.’  This was because guerilla war, while ‘constituting a doubtful benefit and efficiency’, constituted ‘a certain atrocity; it was the ‘most terrible aggravation of war’.  The foundation of the modern laws of war was based on jus in bello (the laws of war), and the exclusion of jus ad bellum (principles of just war).”  (1)

For the bourgeoisie, war was essentially a conflict between states where a monopoly of force was exercised by state directed armed forces.  The “guerilla war” of an occupied people, and the necessity to then repress a civilian population, broke with the focus on destroying the centrally directed armies of a hostile state. The involvement of a civilian population in the pursuit of war, or deliberately targeting the civilian population, made the actual diplomatic resolution of a conflict between states unpredictable or unmanageable.

From the first Geneva Convention on Prisoners of War of 1864, to the final set of Geneva Conventions in 1949, the legal boundaries of contemporary warfare were clarified.  But despite these guidelines, the reality was that states inevitably over rode the legal position for military and political ends.  The whole issue of “total war” was explored through the practice of the armed forces of Europe and North America during the First World War.

Action against civilians was a strategic part of securing the pre-conditions for victory.  Variations of siege, blockade and interdiction against civilians receiving the necessities of life were an essential part of both sides activities in the first inter-imperialist war.

As Nicholas Mulder illustrates:  “Today, economic sanctions are generally regarded as an alternative to war.  But for most people in the interwar period, the economic weapon was the very essence of total war.  Many sanctionists regretfully noted the devastating effects of pressure on civilians but nonetheless wholly accepted them.  Woodrow Wilson held that “if thoughtful men have thought, and thought truly, that war is barbarous,…the boycott is an infinitely more terrible instrument of war.”  William Arnold-Foster, a British blockade administrator and ardent internationalist, admitted that during the Great War “we tried, just as the Germans tried, to make our enemies unwilling that their children should be born: we tried to bring about such a state of destitution that those children, if born at all, should be born dead”.  Internationalists were exceedingly honest about this awful reality for a good reason.  By deliberately spelling out the horror of enforced deprivation, they hoped to dissuade revisionist states from even thinking about challenging the Versailles order.  A fear of being blockaded would keep the peace”. (2)

By “sanctionist” and “internationalist”, Mulder means those politicians who defended the League of Nations, and supported international actions against war. 

He goes on to indicate the impact of economic sanctions against the civilian population:  “In World War 1, 300,000-400,000 people died of blockade induced starvation and illness in Central Europe, with an additional 500,000 deaths in the Ottoman provinces of the Middle East affected by the Anglo-French blockade.  Before World War 2, these hundreds of thousands of deaths by economic isolation were the chief man-made cause of civilian deaths in twentieth century conflict.” (3)

This is an underestimation.  The blockade involved preventing essentials from reaching a civilian population.  But the warring parties also took essentials from civilian populations to serve their armed forces.

In Iran, the national movement supported neutrality.  This was ignored by the British occupying forces.  The British authorities commandeered Iran’s resources which created a catastrophic famine in the country.

By an examination of demographic records, and US State Department records and American sources, Mohammad Gholi Majd arrives at the following estimate: “It can be confidently stated that the population of Iran in 1914 was 16-20 million and that 8-10 million Iranians were lost to famine and disease during World War 1.  That is, one-half of Iran’s population was wiped out, and that more people died of war-induced famine in Iran than all the combined battlefield casualties of the war.” (4)

These figures are not accepted by all Iranian historians.  Ervand Abrahamian writes: “These wartime disruptions coincided with bad harvests, cholera and typhus epidemics, and most deadly of all, the 1919 influenza pandemic.  Altogether between 1917 and 1921 as many as 2 million Iranians – including one-quarter of the rural population – perished from war, disease and starvation.  One British eyewitness wrote that by 1919 hungry tribesmen were taking to rural banditry while starving peasants were rumoured to be resorting to cannibalism.” (5) Whatever the final toll, there is no dispute that a social catastrophe was inflicted by imperialism on the Iranian people.

Alongside the obvious role of military occupation, the above shows the tremendous power that a hostile state can wield over an oppressed people.  Thus, the integration and regulation of this power over civilians was an essential part of the League of Nations.  To punish or deter any state defying the League involved establishing political institutions and practices against any “unlawful” aggressor.  The League had a limited membership, dominated by the European victors of World War 1.  The US had considerable influence in the League’s foundation and political framework, even though domestic opposition prevented the US from joining.

The decision on sanctions was a product of US and British concerns.  A state that launched a war of aggression, in breach of the League’s covenant, would face sanctions, whether or not the member states, or the League as a whole, chose to wage war in response.  David Miller, US President Wilson’s advisor agreed the final text with Robert Cecil, who represented the British government. 

Mulder writes:  “The modification made on Miller’s behest was small in content but large in meaning.  Indeed it is difficult to overstate its significance for the modern history of economic sanctions.  By making possible coercive sanctions without creating a state of war, the Cecil-Miller draft for the first time broke the long-standing link between the power to blockade and the condition of belligerence.  Although subsequent drafts always defined aggression as an act of war; they no longer specified that the League response against it would take place in a state of war.  A new modality for the use of force – non-belligerent economic coercion – thus entered world politics at the highest level on January 1919.” (6)

The class character of the sanctions weapon is well illustrated by the fact that the first targets of peacetime sanctions (apart from the extension against Germany and Austria into peacetime) was against Soviet Russia and the Soviet Republic in Hungary.  Effective sanctions have remained the real prerogative of imperialist powers.

The use of comprehensive sanctions is the equivalent of an act of war, without declaring the existence of war or providing the coverage of the international law concerning war.  This was a position taken over by the dominant states in the founding position of the United Nations (UN).

Again from Mulder: “During inter-allied talks held at Dumbarton Oaks from August to October 1944, the League sanctions model was reworked.  Sanctions were recognised as both war-preventing and war-containing measures.  They would be enforced by the UN Security Council, which could punish non-participation and enforce general implementation.  Military action could be taken to ensure the efficacy of blockades, which could proceed fluidly into war if the Security Council so decided.  Sanctions were thereby firmly established midway on the spectrum between moral pressure and military action.” (7)

As is evident, the assumption is of a coordinated response by UN member states, authorised by the UN Security Council.  It certainly did not anticipate, nor legislate for, the widespread use of unilateral sanctions which has become an apparently essential and routine practice of the US government.  Such sanctions do not have any legal standing in international law.  But they do have standing in so far as they are supported by the fearsome power of the US military and financial institutions.

There were precedents for unilateral sanctions during World War 2.  The most well known being the decision taken by the British government, under Churchill’s leadership, to divert civilian resources, in this case food, from Bengal to sustain allied armed forces.  The result was, as summarised by Shashi Tharoor: “…nearly 4 million Bengalis starved to death in the 1943 famine.” (8)

And, a similar decision was made in Iran, following the British led allied occupation in August 1941.  Shah Reza Khan was overthrown, replaced by his son Mohammad Shah Pahlavi, who was effectively powerless at the time.  The Iranian economy was diverted to serve the allied war effort, despite, once again, Iran’s formal neutrality.  Again millions of Iranians died of starvation and disease between 1941 and 1944.

Mussadiq – the first clash between sanctions and resistance economics 

The coup against Reza Shah, and the occupation from 1941, gave impetus to national resistance inside Iran and a new political opening.  With the new Shah seriously weakened, the rising forces of Iranian civil society pressed for more representative government in the country.  In particular, the long standing grievance over the British government’s monopoly over Iran’s oil production, distribution and sale became the focal point for the risen people.

A breakthrough was reached when Mohammad Mussadiq was elected Prime Minister in 1951  with a large popular vote, and a mandate to secure the nationalisation of the oil industry.  This involved a fundamental conflict with British imperialism. 

At the time, the Labour government was in its final months.  Attlee’s government opposition to the Iranian demand obviously lacked integrity.  Jack Straw writes: “Foreign Secretary Ernest Bevin immediately saw contradictions staring his government in the face. ‘What argument can I advance against anyone claiming the right to nationalise the resources of their country?’ he asked in a letter to the Chancellor of the Exchequer and the Minister of Fuel and Power when the crisis with Iran first arose in 1946. ‘We are doing the same thing here with our power in the shape of coal, electricity, railways, transport and steel.'” (9)

But there was never a contest between the Labour government’s embarrassment over the justice of Iran’s case and the Labour government’s support for the British Empire.  Throughout, the Labour government actively opposed the Iranian people’s struggle, and created the pathway to the subsequent coup against Mussadiq.

At issue were the considerable rewards from the British government monopoly in Iranian oil.  An original monopoly concession from 1901 was secured and later renegotiated with Reza Shah in 1933, despite the obvious imbalance between the negotiating partners.  The Anglo-Iranian Oil Company (AIOC) was actually owned by the British state, even if it claimed an ‘independent’ governing board.

Homa Katouzian writes: “The Iranians pointed out that Britain had obtained the 1933 Agreement from an arbitrary ruler by the threat of force, or – as most of them believed – by issuing an order to him as its local agent; that it had been worse than the previous concession and had in fact led to a net financial loss to Iran ever since; that the company had ignored constant Iranian demands to see its general accounts, and to be told of the terms and quantity of its sales to the Royal Navy on special terms.  They charged the company, on some objective evidence, with literally stealing crude oil via secret underwater pipelines connected to Iraq.  They mentioned the company’s effectively autonomous rule in a part of the country, its treatment of the inhabitants as second-class citizens in their own land, its discrimination between expatriate and domestic workers and staff, and its particularly bad labour relations and low wage rates.  They showed that they were being paid in royalties up to 10 or 12 per cent of the company’s net proceeds, while the amount the company paid to the British government in taxes alone could be as high as 30 per cent.” (10)

In addition, the issue of Iranian oil overlapped with the continued efforts of British governments to maintain the pound sterling area which gave imperialism additional profits of trade. 

Steven Galpern explains: “Iranian oil, like almost all Middle Eastern oil, was sold in the Eastern Hemisphere either to sterling area members or to non-dollar, non-sterling countries that had easier access to pounds.  Therefore, purchasing oil from Iran in dollars or anything else would represent a drain on the sterling area’s balance of payments because Britain would have to convert pounds into foreign exchange. … In 1947, the Foreign Office wrote to its representatives stationed around the globe: “We must maintain confidence in our currency and make sure that as many countries as possible are willing to take sterling from other countries as well as from the sterling area in payment for their current exports: this is necessary if we are to keep our own economy running, and avoid a heavy blow to world trade.”  … Iran’s use of sterling had also historically provided a good outlet for sterling area exports, a boon for the pound and the Empire-Commonwealth.” (11)

Clearly such preoccupations are purely monopolist, having nothing to do with the interests of the Iranian people.  The Iranian people refused to be cowed. In June 1951, the Iranian flag was hoisted over the AIOC refiniery in Abadan, and the AIOC assets were taken back.  The Labour government took the case to the International Court at the Hague in July 1951.   Subsequently the same government raised a complaint at the UN Security Council in September 1951.  No authorisation for sanctions was secured from the Security Council, although mediation was attempted.  The International Court of Justice found in Iran’s favour in July 1952 – which did not result in compliance by the now Conservative led British government.

Throughout, the British government did not adhere to international law. As early as June 1951, the Labour government had decided to support a coup against the popular, elected Prime Minister of Iran.  There was a debate about direct military intervention, amongst the advocates of which included Herbert Morrison and Emanuel Shinwell.  But such a risky course was rejected. Action short of war was initiated.

As Ervand Abrahamian explains: “The British, …, imposed an economic embargo on Iran.  Avoiding the term “embargo” because of its legal implications, they froze Iran’s assets in the Bank of England – thereby limiting sale of such crucial goods as rubber, spare parts and machinery. They also imposed a naval blockade to prevent the export of Iranian oil.  Such measures would later be redefined as “unilateral sanctions”.  To give bite to the embargo, they “cornered” the tanker market, and threatened to impound tankers leaving Abadan on the grounds the oil had been “pirated”… the British persuaded the Americans to participate in the embargo.  The Truman administration instructed American tankers as well as oil companies – both major and minor companies – to stay clear of Iran.” (12)

Alongside these measures, 2,500 British oil technicians were instructed to evacuate, or have their salaries blocked from being convertible to sterling.  1,400 Europeans were blocked from filling the vacancies.  Additional British troops were deployed to Iraq, warships were sent to the Persian Gulf, the RAF buzzed the Abadan refinery,, and plans were drawn up for a possible invasion of the oil province of Khuzestan.  And as a financial sanction, a Memorandum of Understanding between the two countries was suspended.  This had allowed for Iran to be provided with dollars by Britain, thus enabling Iran to purchase goods it could not obtain in the sterling area.

Faced with such an embargo and set of sanctions, none founded in international law, the remarkable courage and creativity of the Iranian people demonstrated the power of “resistance economics”.

Describing the starting point for resisting the embargo, Homa Katouzian writes:  “Prior to the oil nationalization, a Seven Year Plan had been drafted for economic development, consisting of a number of macroeconomic expenditure projects with emphasis on rural development and the socio-economic infrastructure.  Oil revenues were to contribute 37.1 per cent of the plan’s financial requirements, and another 31.9 per cent was expected to be financed through loans from the World Bank.  The virtual standstill in oil operations and exports, the British blockade, the AIOC’s refusal to pay the royalties it owed Iran up to the nationalization act, and the freezing of Iran’s considerable sterling facilities by the Bank of England were therefore a sudden and substantial shock to the economy.  Besides being a source of substantial exports and foreign-exchange earnings, oil revenues could be used to supplement domestic consumption and investment.  The loss of the revenues, therefore, presented the government with a balance of payments, a fiscal, and a monetary crisis.” (13)

Mussadiq’s government had to act or submit to the embargo.  It chose struggle, and implemented a series of measures which allowed it to hold the country together while trying to resolve the dispute around nationalisation.  These amounted to a system of “non-oil economics”.

Katouzian elaborates a series of policies adopted by the Mussadiq government.(14)  These included dealing with the foreign exchange crisis by dividing imports into necessary and luxury goods.  Necessary goods were balanced against marketable exports, while luxury imports were balanced against less marketable goods for the international market.  Some imports were entirely prohibited where local products could be supported as substitutes.  Barter deals, to avoid currency exchanges, were established with a number of countries.  Some key products, especially food and medicine, were imported at a lower exchange rate, while other products were imported at a higher exchange rate depending on their relative priority.  As a result, the government reduced the current account deficit in the period 1951-3, despite the absence of oil revenues.

To increase public revenues, after the loss of oil receipts, there were tax increases.  Income tax increases were attempted, but faced collection problems.  More successful were increases from import tariffs.  Indirect taxes were raised on goods from state monopolies, such as tobacco, tea, sugar and opium.  One impact of the embargo was to reduce government opportunities to obtain foreign loans to virtual nothing.  Government debt to the Bank Melli Iran increased, much of which was a result of having to maintain and run the nationalised oil industry while being unable to export oil.

There was, inevitably, a cut in public expenditure, but in Katouzian’s words: “It was the government’s great popularity which enabled it to take such unpopular measures without producing a backlash of public opinion against itself.” (15)

Mussadiq reviews these issues in his “Memoirs”.  He demonstrates that his government did balance and sustain the economy: that a “non-oil economy” was possible under conditions of embargo/sanctions.  Thus independence from imperialism could be maintained – but of course, the country would not flourish or grow significantly under such conditions.  But survival is an essential part of the national struggle, and his government showed this in practical terms.

As he wrote: “…without any oil resources of foreign aid, the government managed to run the country, and even pay the National Iranian Oil Company’s budget deficit which had been another burden on government.” (16)

This, despite the fact that the country had been bled by British imperialism.  “Iran’s treasury had been empty because, during its concessionary period, the Anglo-Iranian Oil Company had made £5 billion, and paid to the Iranian people only £110 million, and yet much of that sum was spent on strategic projects.  Apart from that, the company also made much profit from secret and illicit exploitations of oil …” (17)

Still, with what resources it had, the Iranian government supported its own industry and agriculture, demonstrating both integrity and efficiency.  Mussadiq continues: “It is well known that when I took over the government many firms were still incapable of standing on their own feet, and needed government subsidy, because of the incorrect economic policies of the past.  It did not take long, however, before such firms became financially self-reliant, as a result of the government’s sound economic measures, and for the first time, in 1951-2 non-oil exports exceeded imports.  But after the fall of my government this balance was lost, and the imports increased at an abnormal rate, such that, in 1954-5, total imports reached the level of 1,900 million tomans, whereas [non-oil] exports had declined to 1,200 million tomans.” (18) A toman is 10 rials, the rial being the national currency.

This was achieved in a period when oil exports, previously the major sopurce of government revenue, had been reduced to virtually nothing. “In the eighteen months from January 1952 until the coup, Iran exported only 118,000 tons – equivalent to just one day’s production” (19)

A sense of the energy of the beleaguered government is given in this quote by Nikki Keddie: “The restoration of Mosaddeq was a sign of new strength and determination by the nationalist coalition, and the signal for some serious reforms.  In 1952 came efforts to enforce tax collection and reduce the landlord’s share of the crop.  Several irrigation dam projects were launched, and also a rural development program, along with the United States Technical Cooperation Administration, which carried on agricultural education and pest control.  Import limitations and government planning resulted in the first substantial postwar expansion of industry.  Output of refined sugar, textiles, and minerals rose.  The government began four large textile mills, several dry-fruit processing plants, a cement factory, and sugar refining plants.  Measures to encourage exports actually produced a growing favourable trade balance in 1952 and 1953.” (20)

This general sense of purpose is recognised by Abrahamian: “To deal with the embargo, Mossadeq drew up an “oil-less budget”.  He cut state salaries, eliminated chauffeur-driven cars for senior officials, postponed development projects, restricted luxury imports, issued government bonds, used up gold and foreign exchange reserves, printed bank notes, and gradually devalued the currency – the black market value of the dollar rose from 31 rials to 97, and the pound from 89 rials to 256. …The British did not really expect economic pressure to destroy the Iranian government, but hoped they would compound internal conflicts.  As early as 1951 their commercial attache had warned that trade sanctions would have little effect on a country that was still predominately agrarian.” (21)

As the struggle deepened Mussadiq was prepared to continue taking measures against those domestic forces opposing the national struggle.  After the attempted coup in July 1952, which involved mass mobilisation and martyrs on July 21st (Siyeh-i Tir), Mussadiq consolidated.  “Mossadeq followed up his victory with a rapid succession of blows struck not only at the shah and the military but also at the landed aristocracy and the two Houses of Parliament.  He excluded royalists from the cabinet and named himself acting minister of war.  He declared Siyeh-i Tir to be a national uprising … and the casualties to be national martyrs.  He transferred Reza Shah’s lands back to the state; cut the palace budget, and allocated the savings to the Health Ministry; placed the royal charities under government supervision …forbade the shah to communicate directly with foreign diplomats; forced Princess Ashraf, the politically active twin sister of the shah, to leave the country; and refused to act against Tudeh [communist] papers that denounced the court as “the center of corruption, treason, and espionage”… By May 1953, the shah had been stripped of all the powers he had fought for and recovered since August 1941.” (22)

Such were the creative adaptions to the conditions of the embargo.  However, the struggle was also taking place against the growing hegemony of US imperialism in the Persian Gulf.  It was a US firm, ARAMCO, which had secured the oil concession in Saudi Arabia in 1933.  This was followed by the US establishing a political alliance with the Saudi regime during the course of World War 2. Thus a platform existed to begin to supplant the dominance of British imperialism in the region.

“After the Second World War the United States strove to replace Britain as the dominant power, especially when oil changed from being a commercial product to a strategic commodity of prime importance.  While the United States did not depend on Saudi oil after the war, it considered Middle East oil, including that of Saudi Arabia, as an essential resource for the reconstruction of Europe’s devastated economies.  From the United States’ perspective, access to Middle East oil came to be viewed as critical to the success of the Marshall Plan and the reconstruction of Europe.  America’s interest in Saudi Arabia and its oil should be seen as part of its concern to maintain its superpower position after the Second World War.” (23)

The US was seen in Iran as less wedded to colonialism than Britain.  Mussadiq shared this view and hoped the US would play a constructive role in resolving the conflict.  However, the more the US was drawn in the more it became evident that it was pursuing its own interests.  To secure US support, the British government played up the threat of a communist takeover in Iran, even though the Tudeh Party was distant from the Mussadiq government until the final episode.

Indeed it was notable that the government of the USSR was decidedly cold towards the struggle Mussadiq led.  This cannot be unrelated to the earlier refusal of Mussadiq to support an oil concession for the USSR in the north of Iran.  This did mean that Mussadiq was isolated from all of the major international powers.

“…the Soviet Union was not directly active against Musaddiq, but it offered him no help either: it could have modified the attitude of the Tudeh Party; it could have given moral and material support to Musaddiq’s government; and, at least, it could have paid its war debts to Iran, which were long overdue and in the absence of oil revenues, badly needed.  It returned them to the Shah and his dictatorial government less than two years after the 1953 coup, when it was  beginning a four-year period of friendly relations with him.

“The Tudeh Party began to moderate the tone of its attacks on Musaddiq when he had clearly lost American good-will and the support of some of his own political allies.  But this was a relative shift of position, and the party never changed its attitude towards Musaddiq even to the level of constructive opposition” (24)

The US government probably wasn’t taken in by the British government’s ‘red scare’.  What the US government did share with Britain was a concern about the dangers of oil nationalism and nationalisation.  In December 1950 the US government had supported a new agreement between the Saudi regime and the US owned ARAMCO which established a “fifty-fifty” principle for oil revenues between the contract partners.  This ‘concession’ by the oil company to the Saudi regime was seen as essential to consolidate the position of the Saudi regime.

In these circumstances, neither the real nationalisation of oil by Iran nor the intransigence of the AIOC/British government were acceptable to the US government.  Increasingly the US took a leading role until its resources and political weight proved decisive in the success of the CIA/MI6 organised coup against Mussadiq.

The fact that oil nationalisation was removed from the regional states’ agenda until the 1970’s is one measure of the coup’s significance.  Another, and at least as important, measure is that the post-coup regime of Mohammad Shah Pahlavi became the “twin pillar”, along with Saudi Arabia, of US security and domination strategy in the region. 

This was now in a Persian Gulf where British imperialism was increasingly marginalised, culminating in the withdrawal “east of Suez” from 1967 to 1971.  Iran’s oil was now subject to an international consortium where US interests had a 40 per share.  And, though his government ended in defeat, there is real meaning in the sub-heading of Musaddiq’s Memoirs – “The End of the British Empire in Iran”.

Revolutionary Iran under sanction

This first experience of systematic sanctions resulted in a defeat for Iranian independence.  But the episode demonstrated that sanctions in themselves were insufficient to bring down a determined people.  Had the Iranian government only had to deal with the British government then it is very likely to have prevailed, as Nasser was to in 1956.  But US imperialism weighing in proved decisive.

The post-coup settlement delivered the Iranian state to US purposes.  A bulwark against the forces of communism and revolutionary nationalism, the Shah’s regime appeared to be an enduring achievement of the US’s foreign policy.  However, its apparent stability was shattered by a much more enduring achievement of the Iranian people – the revolution of 1978-9 and the establishment of the Islamic Republic of Iran.

To examine the revolution would take us too far from our subject.  The origins, development and events of the revolution represent one of the most important endeavors of the twentieth century.  Its key result  was the re-entry of the Iranian people as makers of world history through establishing their first genuinely independent state in the epoch of capital and imperialism.  In so doing they broke not just the US domination over their country, they also broke up the framework of US domination over the Persian Gulf.

The resonance of this triumph of an oppressed people was felt in large parts of West Asia and North Africa.  It is then hardly surprising that US imperialism did not accept this result.  For more than forty years, the Iranian people have had to resist sanctions, military actions and war in defence of their right to make their own future.

“For Washington, the revolution represented a devastating strategic loss.  Since the British withdrawal from the Persian Gulf in 1971, Iran had become the cornerstone of America’s security architecture for protecting Western interests across the region.  As both the “pivot in the price hike” and the sole regional leader willing to buck the Arab oil embargo, the shah had made himself equally consequential for energy markets and the global economy.  Iran’s revolution reshaped the country, the region, and its interaction with the rest of the world, especially the United States.” (25)

The US also lost a number of immediate resources.  These included the cancellation of a $7 billion arms contract; listening posts used to monitor Soviet ballistic missiles; its intelligence network inside Iran and any immediate ability to influence events there.  But it would not be true to suggest that the newly established Islamic Republic was hostile to continuing relations with the US.

Former Iranian diplomat Seyed Hossein Mousavian writes: “From the Islamic Republic’s inception, Ayatollah Khomeini did not ban a relationship with the US.  He only disallowed relations with South Africa, which had an apartheid regime, and Israel.  All the influential high-ranking officials, including Ayatollah Beheshti, as well as the Provisional government, sought a relationship with the US.  Let us not forget that the first time the embassy was seized, in February 1979, it was Ayatollah Khomeini who ordered its evacuation, and the revolutionary guards secured the location.

“Despite Iran’s efforts to maintain a relationship, the US was transfixed by the Cold War and was unable or unwilling to conceive of anything other than a means to meddle in Iran’s politics in order to confront Soviet expansionism and protect US economic interests in Iran.  The sudden rise of communist influence in Afghanistan and the existence of a pro-Soviet Iraq only made America more determined to pursue this line.” (26)

Evidence of this determination emerged from the documents taken in the second seizure of the US embassy in November 1979.  This seizure, and the detention of embassy staff, was to lead to a breakdown in relations between the two countries.  It followed the Shah’s admission to the US, despite the Iranian demand for his return.  Nor would the US assist in the return of the fortune his family had seized from the Iranian people.  Further, the US government had refused to provide the spare parts and arms worth $400 million for which Iran had already paid.

Mousavian insists that Khomeini and senior officials had no prior knowledge of the seizure – and that the students who led the seizure only planned for a 48 to 72 hour protest occupation.  But concerns were great in Iran that the embassy might be used, as it had been in 1953, as an organising centre for a coup.  Documents seized supported views of continuing US interference in Iranian affairs.  The dynamics of a tense situation, and collapse of diplomacy, led to a 444 day crisis, and the detention of more than 50 US embassy staff.

The response of the Carter government was to set a pattern for the behaviour of US Presidents ever since.  Carter banned the import of Iranian oil, and froze $12 billion of Iranian’s assets.  Later, he was to implement a trade and travel ban with Iran.  The Iranian people were experiencing their second clash between sanctions and resistance economics.  One that was to last more than forty years, with few pauses or interruptions.

The first round of sanctions and war

The first period of US sanctions against Iran lasted from 1979 until August 1996.  Although these sanctions were certainly a problem for Iran, there was a limit to their effectiveness.  These broke trade between the US and Iran, a significant loss of market – the US was the third largest exporter to Iran, and the ninth largest customer for Iranian exports.  But there was no attempt to impose secondary action upon countries who continued to trade with Iran.

“By the late 1970s, the United States and Western Europe were Iran’s largest trade partners.  This trade dependency would have increased Iran’s vulnerability to comprehensive trade sanctions but the unilateral US trade sanctions that were introduced in the 1980s and 1990s had a limited impact on the Iranian economy for several reasons.  First, they targeted US-Iran trade on specific products, which affected some sectors of Iran’s economy without significant impact on others.  Second, since many industrial countries were willing to trade with Iran, Iranian businesses were able to find alternative sources for many American products though not all of them.  In some cases costs were higher and quality was poorer but nevertheless substitute products were found. 

“Third, the sanctions did not directly target Iran’s oil exports and oil revenues.  Iran lost the United States as an oil client but retained many European and Asian clients. Similarly the US prohibition of investment in Iran’s oil and gas sector in those decades only had a partial impact, as Iran was able to obtain investment and technology from European and Asian oil companies.  Fourth, Iran was able to obtain some American products such as spare parts for US made machinery and aircrafts in international black markets.” (27)   

It was not the first use of sanctions against the Islamic Republic that created its first general test of survival.  This was to come from the war and invasion launched by Saddam Hussein in September 1980, directly backed and sustained by US imperialism and its allies in the Persian Gulf.

“The Saudi-Iranian relationship in this period has been characterised as one of a ‘cold war’.  The kingdom moved to form a ‘real alliance’ with Iraq, evidenced by the extent of the strategic assistance and finances extended to the Iraqi regime.  Saudi-owned AWACs (Airborne Warning and Control Systems aircraft), supplied mainly by the United states, provided crucial intelligence information on Iranian military tactics and targets to Baghdad. Financially, Saudi Arabia led other Gulf states in providing loans to Iraq that made possible the pursuit of Iraq’s ‘guns and butter’ strategy.  By the end of 1982 the approximate distribution of funds per Arab donor was $14 billion from Saudi Arabia, $6 billion from Kuwait, $2-4 billion from the United Arab Emirates and $1 billion from Qatar.  These loans added up to a total of around $25-30 billion by 1983 and exceeded $40 billion by the end of the war.  Furthermore, Saudi Arabia and Kuwait engaged in counterpart oil sales whereby crude was provided for sale to Iraqi customers or in payment of contracts and deliveries to Iraq.” (28)

The Iranian people paid a terrible price for imperialism’s support for Saddam war on Iran.  Casualty estimate vary but those given by Rahim Safavi in 2003, then Commander of the IRGC, are likely to be as accurate as any.  He spoke of 213,000 Iranian deaths and 320,000 war related injuries. (29)

The need for state mobilisation of the economy was evident in the war.  This was greatly aided by the structure of the economy inherited from the revolution.  “The Law for the Protection and Expansion of Iranian Industry, approved by the Revolutionary Council in the immediate revolutionary aftermath, allowed the nationalisation of heavy industries, industries owned by specifically named individuals who had allegedly acquired their wealth by corrupt means, and industries which had liabilities exceeding their assets and were facing economic crisis and bankruptcy.  By the mid-1980s only smaller industries remained in private hands.” (30)

The impact can also be registered in how it cut into the living standards of the population.  Mohammad Reza Farzanegan has estimated the cost to Iran’s economy of the impact of the revolution, which involved a massive economic disruption, and the war immediately afterwards.  Before these events, in 1977, average GDP per capita in Iran was approximately $9,000 in constant 2010 dollars.  At the end of the war this had fallen to $3,800.  Farzanegan estimates: “During 1978 – 1988, the average annual economic cuts for an Iranian were $3,150.  The lowest average annual cost was $1,572 (in 1978), while the highest annual financial burden $5,135 (in 1981).” (31)

If it is difficult to disaggregate the cost of the revolution from the costs of the war, then it is impossible to measure the impact of sanctions during this period.  However, there are some guides: “…in 1980, U.S.-Iranian trade plummeted when U.S. exports to Iran dropped from $3.7 billion to $23 million, while imports from Iran dropped from $2.9 billion to $458 million – mostly in oil.  One case study estimated that the total economic cost to Iran from 1980 to 1981 was roughly $3.3 billion. … The most effective measure was the asset freeze, which “effectively immobilized $12 billion in Iran’s assets, including most of its available foreign exchange reserves.” (32)

With the start of the war, the outgoing Carter administration imposed a sanction on arms sales to Iran, along with dual use technologies.  This was not matched on Iraq, where the US provided chemicals which were later weaponised by Saddam, and used against Iranian soldiers, citizens, and later Kurdish villages in Iraq.

During the war, In October 1983, the US state department designated Iran as a “State Sponsor of Terrorism”, which reinforced existing sanctions, including by banning financial assistance to countries who were providing military goods to Iran.  At the time of this designation, Iran was being subjected to chemical attacks and was refusing to reply in kind.

In addition, a variety of US domestic laws and executive orders banned conventional weapons transfers, technology transfers to the military, and transactions with Iranian entities alleged to support terrorist groups.  Towards the end of the war, President Reagan banned all imports from Iran.

Displaying the typical aplomb that comes from state hypocrisy, none of these restrictions prevented the ‘Irangate’ scandal.

This is how ex-CIA and ex-National Security Council member, Bruce Riedel describes it:  “…an American plot to sell arms to Iran in return for help in freeing American hostages in Lebanon held by Iranian-sponsored terrorist group Hezbollah.  The operation also funded aid to right-wing guerrillas fighting the leftist government of Nicaragua, aid that Congress had banned.  The secret dealings broke into the public domain in November 1986 when the Iranians leaked news about some aspects of them to a Lebanese magazine.   At first the president tried to deny any knowledge of the scheme, but he finally admitted some responsibility in a speech on March 4 1987.  In fact, Reagan was at the center of what came to be known as the Iran-Contra scandal.  He drove the policy process toward a secret opening with Iran because he was obsessed with freeing American hostages… It was Reagan’s decisions, not some rogue operation run by the CIA’s Bill Casey, that led to America selling arms to Iran in return for promises, never fulfilled, to free the hostages.  Despite his later denials, Vice President George Bush was also deeply involved in the policy process…” (33)

Amongst the layers of cant, it should not be overlooked that the US government’s relations with the viscious Contras fits like a glove the description of “state sponsored terrorism”.

There is a continuing debate about whether the Iranian government could, or should, have concluded the war earlier.  This serious debate is best left to the Iranian people.  However, there is a danger of overlooking that ultimate victory went to Iran, in having defeated the efforts of Saddam, his imperialist backers and Gulf Cooperation Council (GCC) allies.   The national achievement is that despite the unfavourable balance of forces, the independent state survived.

Narges Bajoghli’s interesting study of activists from the IRGC, and aligned bodies, highlights the pride that national independence has furnished Iranians since 1979. “The Islamic Republic is the only regime in the past two centuries in Iran that has not lost or signed away our national territory to foreign powers,” museum guide Majid said as he pointed to a large map of Iran in an exhibition hall in the newly built, multimillion-dollar museum.  “Look at all the land the corrupt Qajar dynasty sold for pennies and how the Shah gave away the Persian Gulf islands to the unworthy Arabs!”  He pointed to a panel on the wall showing the diminishing boundaries of Iran over the centuries.  “When the Islamic Republic was in its infancy, we were attacked by a strong army backed by the West.  We didn’t know how to command the military yet and the other side had so many sophisticated weapons.  But look at what we did for Iran – how we didn’t lose even a strip of land to the Iraqis.” (34)

Reconstruction under sanctions and isolation

With the end of the war in 1988 a new period opened up.  Most of the sanctions remained in place, but the US was preoccupied with defeating the communist government in Afghanistan, an interest not in conflict with that of the Iranian government.  Ayatollah Khomeini died in June 1989.  The office of Supreme Leader was now filled by Ayatollah Khamenei, formerly president.  The succession was accompanied by the abolition of the post of Prime Minister.  This reform was further sustained by the election of Akbar Hashemi Rafsanjani to the strengthened Presidency in July 1989.  His orientation was to liberalise the economy,  attempt to reintegrate into the world market and renew relations with the imperial powers.  However, post war reconstruction was a daunting task.

Although generally unsympathetic to the Islamic Republic, Suzanne Maloney does recognise the impact of the war on the economy: “The war’s toll and economic policy had an enduring impact on Iran’s relative position in the world economy.  It upended the country’s long-term growth patterns – by 1988, GDP per capita hovered around 54 percent at its 1976 high.  These declines were felt even more acutely by the population, which despite the isolating effects of a decade of revolution and war, remained engaged and informed about the world about them.  By 1988, Iran’s per capita income was 25 percent less than that of Turkey, which it had exceeded in the 1960s, and a mere 23 percent of per capita GDP in Western Europe, from 64 percent in 1976. Similar differentials can be seen in comparison with …other middle income developing states, including Malaysia and South Korea.  The war had torpedoed an Iranian trajectory to secure high middle income status, perhaps permanently.” (35)

It is misleading to reduce the first ten years of the Islamic Republic, including eight years of war, to a straightforward setback.  The determination which sustained the nation against the imperialist backed war also expressed itself in the development of the nation.

“…although very poor, the Islamic Republic’s economic performance would not be considered the worst when compared to the declining economies of most Third World countries in the 1980s.  It is also remarkable that an economy so damaged by the war could manage to remain solvent and sustain itself without significant outside assistance and major external long-term debt.  In 1989, for example, the government’s new long-term foreign debt was reported at $500 million with an additional short term debt of some $10-12 billion (mostly imports credit).  The recognition for this partly goes to the Iranian people, who (except for a rich minority) have patiently tolerated extreme economic hardship in the post revolutionary period, particularly since 1986.  Moreover, the numbers mask significant qualitative changes in the structure of the economy, growth of domestic productive capacity in small scale and defense-related industries, transformations in rural areas, and changes in the states objectives, priorities, and policies.  Extensive nationalization; creation of a leading state sector in a mixed economy; reorganization of the banking system and concentration on agriculture, rural development, and deprived regions: and higher education particularly in areas of health services and technical research may also be mentioned.  Improvements in the conditions of many rural areas are particularly noticeable.  A list of such changes includes construction of extensive networks of rural roads, increased urban functions in rural areas, improved literacy rate and health services, and significant electrification and provision of piped water.” (36)  Written in 1990, this assessment by Hooshang Amirahmadi much more clearly outlines Iranian resilience and development than Maloney writing in 2015.

A second round of sanctions

The first President elected to the new role was Akbar Hashemi Rafsanjani.  His preoccupation was post war reconstruction and economic growth through liberalisation and privatisation. 

Rafsanjani’s presidency started from a low base, and with few international links, still subject to US sanctions.  His moves to reconnect to the world market were of concern to a country traumatised by war and foreign hostility.  He therefore had to demonstrate that his policies did not deliver the country to a new form of subordination.

“Acknowledging that the country’s excessive reliance on foreign investors during the Pahlavi period had not been in the national interest Hashemi-Rafsanjani pointed out that a dearth of domestic investment during the war years had perhaps been equally detrimental.  He made the argument that a limited use of foreign funds and technology could help to stimulate the domestic industrial developments necessary for achieving economic self-sufficiency in the long term.  An argument in Resalat defended this view, arguing that, “any country that wants to become industrialised cannot avoid turning to advanced countries for a transfer of technology” …Given that foreign technology is vital for the production of industrial goods, and as “we have to produce non-oil exports in order to gain true independence”…it followed that a resumption of economic relations with the developed world would be a source of “advancement, not dependency”.” (37)

This orientation was carried through in Rafsanjani’s redrafting of the First Five Year Plan, originally worked on by the outgoing Musavi government.  Under the plan, there was a move away from emphasis on state to emphasis on market.  This included a substantial privatisation programme.  Such an approach was welcomed by the World Bank and IMF, who both sent delegations to Iran in 1990.  Despite this opening, actual international engagement was very limited.

“…Iran’s inflows of direct foreign investment remained minimal in the 1990s, even if they had increased significantly compared to those of the war years.  Indeed, $23 million of foreign direct investment inflows in 1991 was a mere drop in the ocean compared to China’s inflows of $4,366 million in the same year; while Iran’s FDI inflows represented 0.02 percent of GDP, those of China represented 1.03 percent… With various domestic barriers to foreign investment only adding to the challenges already presented by the United States’ continued economic sanctions on Iran, very few foreigners viewed the Islamic Republic as an attractive investment opportunity at this time.” (38)

Although it may have been thought that Rafsanjani’s turn would not be unwelcome in Washington, in fact a new clamp on Iran was imposed.  In May 1995 President Clinton made an executive order banning all US trade with and investment in Iran, including the purchase of Iranian oil by American companies abroad.  Robert Pelletreau, Assistant Secretary of State, stated on May 2nd, “These new sanctions, in conjunction with our existing set of restrictions, will create a U.S. embargo against Iran.”

But by Iran’s own efforts, this period of reconstruction after the war was a period of economic expansion despite sanctions.

During the second term of Rafsanjani, the country faced a renewed US offensive.  While attempting to draw closer to the west in economic relations, the Iranian government maintained the planks of its foreign policy.  The opposition of the Islamic Republic to the Oslo Peace Process was a particularly sore point. Further, the US government regarded the regime as behind a series of international terror attacks on the US and allies.

Clinton introduced further sanctions.  Areas of concern, to publicly justify the embargo, included “terrorist acts to undermine the peace process” by Iran’s continuing support for Hamas, Palestinian Islamic Jihad and Hezbollah.  Alongside there were issues of Iran’s military ‘build up’, Chinese and Russian collaboration on Iran’s nuclear energy programme, and the possible pursuit of nuclear arms. 

The new determination to press down harder on Iran was expressed with the passing in August 1996 of the Iran and Libya Sanctions Act (later known as “The Iran Sanctions Act”).  This imposed penalties against non-US firms who involved themselves in Iran’s petroleum sector.

“Congress passed the Iran Sanctions Act which threatened to penalize foreign as well as American oil companies that dared to invest more than $20 million in Iran.  The drying up of foreign investment, together with another fall in oil prices – from $20 per barrel in 1991 to $12 in 1994 – added to Iran’s external debt, strained the currency, and thereby triggered an economic recession.  The rial, which had already fallen from 7 to the dollar before the revolution to 1,749 to the dollar in 1989, plummeted to 6,400 to the dollar in 1995.  Meanwhile, unemployment reached 30 percent, and the price of sugar, rice and butter rose threefold – and that of bread sixfold.  Exiles predicted the imminent demise of the Islamic Republic.” (39)

That “imminent” demise has been predicted time without number since the Republic’s foundation.  But it was not a confidence shared by the US government, which kept introducing sanctions.  Indeed it was the failure of a policy which simply sanctioned Iranian-US relations that led to an increasing focus on hindering other countries trade with Iran.  The new focus began with the Iran-Libya Sanctions Act 1996,  and was to last until 2006, when US government policy focused on  securing multilateral sanctions.

In 1997 the US government prohibited US exports to countries that would incorporate material with products imported by Iran.  Having tied up Iran in many “primary”sanctions under US law, the US government increasingly sought to tighten the net by “secondary” sanctions against foreign entities involved with Iran.  This more and more had an impact, as foreign firms and states would be wary of risking access to the more lucrative US market for the sake of the much smaller Iranian one.

At the end of Rafsanjani’s presidency in 1997 the replacement was the “reformist” Mohammad Khatami.  He sought to engage with the US and the West.  His priority was to improve living standards, particularly amongst the skilled workforce, intelligentsia and students who formed a big part of his electoral base.  His popularity, and call for a “dialogue of civilisations” appeared to provide the West with the strongest opening since the revolution. Indeed in April 1999, and March 2000, there were some small easing of sanctions, as a goodwill gesture to President Khatami and the reformist project.  But this was just token.  In August 2001, the Iran-Libya Sanctions Act was extended for a further five years.

Momentarily, after 9/11, it seemed rapprochement might happen.  There were vigils for the 9/11 victims in Iran.  Iran provided the US with crucial intelligence on the disposition of the forces of Al Qaeda and the Taliban in Afghanistan at the outset of the invasion and occupation.  Yet the US government’s determination to utilise the 9/11 tragedy to remake its domination over parts of the globe prevailed.  For Iran remained a place where US imperialism could not tolerate the status quo.  In February 2002, just weeks after being aided in Afghanistan by the Iranian government, President George W Bush announced that Iran along with Iraq and North Korea constituted “an axis of evil”.  It was clear that regime change remained the US goal for Iran.

Multilateral and unilateral sanctions – the hardest impact

The biggest obstacle to a direct intervention into Iran was the US’s commitments to the military occupation, and governmental direction of Afghanistan and Iraq.  In both cases initial victories turned into slow burning yet ultimately widespread resistance to the foreign invaders.  Such a level of commitment and personnel, even with allied support, meant the US was unable to carry out similar action against Iran.

The existing unilateral sanctions remained in place.  However, the focus of US concern became the election of a radical to the Presidency in 2005 of Mohammad Ahmedinejad.  His domestic economic policy focused on the most disadvantaged sections of Iranian society, while his foreign policy promoted, rhetorically at least more anti-imperialist themes.  In these circumstances, the US government expressed growing concern about Iran’s nuclear power programme, and its alleged pursuit of nuclear arms.

The first practical expression was the passage of Bush’s “Iran, North Korea and Syria Nonproliferation Act” in 2006.  This introduced sanctions against foreign individuals, private entities, and governments that engage in “proliferation activities”, retrospectively covering acts since 1999.

However, it was evident that to have any hope of influencing the Iranian government, while conjuncturally lacking the option of direct military action, international support was required.  The initial vehicle was the UN Security Council (UNSC). In 2006, Iran’s nuclear activities were brought to the UNSC, under Chapter VI of the UN Charter, which meant that Iran’s nuclear programme came under the provision of resolving a dispute “…which is likely to endanger the maintenance of international peace and security.”

In 2007, the UNSC adopted resolution 1747, which imposed international sanctions against Iran’s failure to suspend uranium enrichment. This was followed by UNSC resolution 1803 in 2008, and UNSC resolution 1929 in 2010.  The latter banned Iran from testing nuclear capable ballistic missiles, and placed an embargo on major weapons systems transfer to Iran.  In July 2010, the EU agreed targeted sanctions on Iran which covered individuals, companies and sectors in Iran’s nuclear programme, and other areas.

In these circumstances, a campaign of assassination commenced against Iranian nuclear scientists.  Four were assassinated between 2010 and 2012, and a fifth was wounded in an attempted killing. The most probable organiser of the murders was Israeli security forces, although other pro-imperialist forces may have been involved.  Of course, such actions did not stop the development of Iran’s nuclear programme.

“Beginning around 2005, Iran was subjected to a growing range of multilateral sanctions imposed by the US, EU and the UN with the involvement of other main economic powers.  The most expansive of these sanctions were implemented in 2012 when the US and the EU agreed to impose an oil embargo against Iran and to restrict Iran’s ties to the global financial system.” (40)

While pursuing this framework of multilateral sanctions the US government did not abandon the process of escalating unilateral sanctions upon Iran, with increasingly secondary characteristics.  Obama had spoken of a “new beginning” with Iran in his election campaign.  However his frustration with Iran’s supposed intransigence, domestic pressures in the US, and perhaps concerns about Ahmadenijad’s rhetoric about Israel, meant that by 2010 this new beginning was a dead letter.

The “Comprehensive Iran Sanctions, Accountability and Divestment Act” was introduced in 2010.  This banned investment in Iran’s energy sector, banned selling refined petroleum to Iran, and banned foreign banks from doing business with designated Iranian banks.  In November 2011, Obama expanded sanctions to Iran’s Central Bank, and sought to curtail Iran’s exports by threatening sanctions against countries that did not reduce their oil imports from Iran within a six month period. 

In 2012 Congress passed the “Iran Threat Reduction and Syria Human Rights Act”, supplemented with Executive Order 13622.  These widened the assault upon Iran’s oil industry by imposing penalties on countries that purchased oil from Iran; penalties against individuals and companies providing oil-export related insurance, and financial transactions involving the US financial system.  Congress amended the National Defence Authorisation Act to penalise foreign banks conducting “significant financial transactions” with the Central Bank of Iran, or any Iranian bank under sanctions.  Obama had also used an Executive Order in February 2012 to freeze Iranian assets, and further isolate Iran’s Central Bank.

“The number and effect of the measures adopted during the Obama administration dwarfed the impact of sanctions applied over the previous three decades. Following the last round of US sanctions on Iran’s Central Bank and oil industry, the European Union, the UK, and Canada followed suit.” (41)

In a speech Obama gave in New York in January 2012, he said he had rallied world powers and built an “unprecedented” sanctions regime, claiming to have reduced Iran’s economy to a “shambles”.  The cumulative effect of US unilateral and international multilateral sanctions had enormous impact upon all areas of Iranian life.  Attempts were made under President Ahmadenjad to negotiate a solution.  But Iran’s policy in talks was to maintain its sovereign right to enrich uranium for civilian purposes.  It took a considerable time before the US led ‘international community’ accepted this red line of the Iranian government and people.

Talks had been attempted via the EU to no success.  There was a more notable effort in 2010.  Turkey, under President Erdogan, and Brazil, under Presient Lula, co-ordinated talks with Iran.  This resulted after a number of months in the “Tehran Declaration”.  This was an agreement which would have removed excess locally enriched uranium from Iran to Turkey, where it would be under the control of the International Atomic Energy Agency (IAEA).  This agreement was endorsed by notable figures, such as Mohammad El Baradei, former IAEA director; and UN Secretary General Ban Ki Moon.  Inside Iran 234 out of 290 members of the Majles (parliament) issued a public statement supporting the deal – spanning across all the parliamentary factions.  But it was vetoed by the Obama administration who had negotiated with Russia and China to secure their support for UN sanctions, in return for concessions on matters of those countries concern.

A further expansion of US sanctions followed.  Congress passed the “Iran Freedom and Counterproliferation Act” in January 2013, which expanded secondary sanctions against companies doing business Iran.  By executive Order, Obama sanctioned Iran’s important automotive sector.

Yet the problem was that the Iranian government was refusing to capitulate.  No matter how severe the sanctions the issues in hand were matters of national sovereignty, and the dignity of the Iranian people.  Did they not have the same right as other countries to nuclear technology for civilian purposes, and to enrich uranium for that purpose?  And could the US hold together its international alliance if it failed to genuinely negotiate with Iran?

In this situation, in July 2012, secret back-channel direct talks began in Muscat, aided by the ruler of Oman, Sultan Qaboos.  These were with a relatively low level delegations from the two countries, but were to become the route for an ultimate agreement.

The US maintained its involvement in public talks taking place between Iran and the P5+1 (China, France, Russia, UK and US plus Germany).  Here no concessions were being offered to Iran, and no progress was made.  Tension was very high, with the assessment in the P5 that the possibility of military conflict between the US and Iran was higher than at any time since 1979.  Even so, it was evident that the Iranian government was not about to fold.

In February 2013, Khameini said ” Sanctions are painful and they are a nuisance, but there are two ways to react to such pain: one group are those who start begging for forgiveness, but a brave nation like Iran will try to mobilize its inner resources and to pass through the “danger zone” with determination and courage … The Americans should show that they don’t want to bully us, and that they won’t engage in evil acts, show us that their words and deeds are not illogical and that they respect the rights of the Iranian people, show that they won’t push the region into further confrontations and that they won’t interfere in the internal affairs of the Iranian people – they will see that the Islamic Republic has good will and the people are logical.  This is the only way to interact with the Islamic Republic.” (42)

Alongside this resistance was the growing sense of failure in US policy in the region.  Despite having sent a troop “surge” to Afghanistan from 2009, by summer 2012 they were being withdrawn with no convincing results in securing the US backed government, or in defeating the Afghan insurgency.  Inside Iraq, the US had secured a Status of Forces Agreement which saw all combat forces out in 2011, while retaining a small military presence for training the Iraqi army.  The obvious difficulty in consolidating a pro-US government was highlighted by Obama’s failure to get an extension for a US combat presence.  Given the attention and resources that had been extended by successive US governments these setbacks damaged US standing in the region.

And, the wider Arab world had been convulsed by popular uprisings in Tunisia, Egypt, Bahrain, Yemen and elsewhere.  Protests in Libya and Syria had drawn serious intervention from Gulf states, alongside US and allied powers.  Some progress was registered, from the perspective of imperialism, in the destruction of Gaddafi’s regime, and the suppression of the popular struggle in Bahrain by Saudi Arabia and UAE. But the loss of long standing allies in Tunisia and Egypt added to the sense that US domination was seriously damaged across West Asia and North Africa.

Stabilising the position in Iran could perhaps offer the US the opportunity to achieve friendlier regimes in Syria, Yemen and elsewhere.  The victory of Hassan Rouhani in the 2013 Presidential election was something of a surprise to the US.  He secured victory on the first round, backed by an alliance of conservative and reformist constituencies.  Both Rafsanjani and Khatami had endorsed him.  The election of a non-radical President gave Obama the opportunity to make a previously planned concession.

Through the Oman channel, there had been extensive progress made outside of the public P5+1 talks.  Trita Parsi continues the story:  ” By early November 2013, the United States and Iran had secretly reached a nearly complete deal with only a few loose ends left.  The plan was to present the proposed draft at the next P5+1 meeting in Geneva on November 7.  That meant that the time had come for the rest of the P5+1 to know about the secret negotiations.” (43)

The outcome was a negotiated interim agreement known as the Joint Plan of Action (JPOA).  “The interim agreement … was a genuine compromise that gave both sides a critical gain while ensuring that neither side’s redlines were crossed.  Iran agreed to stop installing new centrifuges, halt production of 20 percent enriched uranium, and stop most of the work at its heavy-water reactor near the town of Arak.  … IAEA would be given unprecedented access to its nuclear facilities and unparalleled ability to monitor and inspect.  In turn, Iran would be given access to about $4.2 billion of its foreign currency holdings, which had been frozen in banks overseas as a result of American financial sanctions.  Meanwhile, sanctions on Iran’s trade in petrochemical products, precious metals, and airplane and automobile parts would be eased.  Finally, the P5+1 states committed to not imposing any new nuclear sanctions on Iran during the term of the agreement. 

“Overall, Iran gained formal acceptance of its enrichment program: secured both sanctions relief and a halt to new sanctions: and developed a path to break free from its international isolation.” (44)

This was not the final agreement.  Further obstacles were to be overcome particularly from domestic opposition in the US and Congress; from the Israeli government, and from the Saudi regime.  But this alliance of hawks could not overturn the combined weight of the Obama administration and the P5+1.  

Addressing his domestic critics, Obama outlined this path: “There really are only two alternatives here: either the issue  of Iran obtaining a nuclear weapon is resolved diplomatically through a negotiation, or its resolved through force, through war.  Those are the options.”  The option of just increasing sanctions until the Iranians gave up completely simply did not exist, the Obama team maintained. “Sanctioning Iran until it capitulates makes for a powerful talking point and a pretty good political speech, but it’s not achievable outside a world of fantasy,” Kerry said on the eve of the deal.” (45)

The final agreed text, the Joint Comprehensive Plan of Action (JCPOA) was thus a recognition that Iran had survived the barrage of unilateral and multilateral sanctions.  Waging war , in the condition of regional instability, offered no certain outcome for US imperialism.  It then had to concede to the effective resistance of the Iranian people.

Trump attempts a re-run

In July 2015 the UNSC endorsed the JCPOA.  The final agreement represented a victory for Iranian endurance.  It did not relieve Iran from the burden of the US’s unilateral sanctions, though these were reduced, but it did remove the multilateral web.  As will be seen in the next section, this resulted in a rapid growth in the Iranian economy.

The signing also represented a shift in US foreign policy.  It did not represent foregoing the goal of regime change.  But it did represent an acceptance that It was not on the immediate agenda, and entailed a limited resumption of diplomacy through involvement in the JCPOA.

With the UNSC decision, the UN sponsored nuclear related sanctions ended.  In January 2016, the EU lifted all nuclear related economic and financial sections.

The US government maintained much of the framework of its unilateral sanctions.  These were covered by its “Iranian Transactions and Sanctions Regulations”.  There was some loosening on restrictions of imports from Iran, notably on luxury goods such as carpets.  Foreign subsidiaries of US firms were now allowed to engage in non-military trade with Iran.

But a ban on general trade, including in oil, remained.  And in December 2016, Congress passed a ten year extension to the Iran Sanctions Act.  Sanction waivers were issued for six month periods, allowing other countries to trade with Iran without incurring sanctions.

The election of Donald Trump to US President confirmed how fragile the commitment of US imperialism was to the shift in policy on Iran.  During his election campaign, in a Presidential debate with Hillary Clinton, Trump described the JCPOA as “the worst deal I have ever seen negotiated”.  This opposition became one of the distinctive features of his campaign.  It was not surprising that, once in office, he sought to withdraw from the  agreement.

After his inauguration in January 2017, Trump initially moved within the framework of the deal.  In May of that year he renewed the waivers on US sanctions for countries trading with Iran on oil.  Inconveniently, in July, his own administration certified that Iran was in compliance with the JCPOA.  He did not accept this, and in October he refused to certify the deal, and placed an onus on Congress to address the problem of the deal.  At the same time he renewed the waivers.

In January 2018, he again renewed waivers, but stated he would not further renew, unless Congress “fixed” the deal.  As this was hardly within Congress’s capacity, it was only a cover for his difficulty in demonstrating grounds for withdrawal.

On May 8 2018 Trump announced the US withdrawal from the JCPOA.  Those countries and companies trading with Iran were given 90 or 120 day wind-down periods for terminating trade.  On August 7, 2018, Trump reimposed sanctions on trading in gold and precious metals, in the automotive sector, and blocking the import of Iranian luxury goods.

A setback for his administration was registerd on October 2nd that year.  The International Court of Justice found for a complaint lodged by the Iranian government that restrictions on trade were a breach of 1955 Treaty Normalising Relations with Iran, signed by the US government.  The court’s ruling directed the US to remove impediments on exports to Iran of “medicines, medical devices, foodstuffs and agricultural commodities”, plus “spare parts and equipment for safety of civil aviation”.  The US government refused to accept the ruling.  And, demonstrating the extent of its allegiance to international law and ‘rules based order’, withdrew from the 1955 Treaty on the same day that the court delivered the ruling.

The pace of sanctions imposition accelerated.  On October 16 2018, the Basij Cooperative Foundation, involving 20 firms and institutions, were listed as Specially Designated Global Terrorists.  On November 5th, the end of the 120 day wind-down, all remaining nuclear-related sanctions were “relisted”. Companies exporting immediately halted food and medical regulated trade with Iran after banks refused even authorised transactions with Iran.

In November waivers were issued for oil trade to China, Greece, India, Iraq, Italy, Japan, South Korea, Taiwan and Turkey.  None of these were to be renewed after May 2019, except for Iraq.  The latter had been so wrecked by the US war and occupation that it was absolutely dependent upon Iran for energy supplies and power.

In April 2019, Trump considerably raised the tension by designating the Islamic Revolutionary Guards Corps (IRGC) a “Foreign Terrorist Organisation”.  This was extremely provocative – the IRGC is part of the Iranian state, including its armed forces.  It also meant that this designation covered up to 11 million Iranians, who were members of, or connected via organisations affiliated to the IRGC.  At the same time the administration defind the export of medicines to Iran as prohibited if they go to a “designated actor or entity”.

In May 2019, Trump sanctioned Iran’s industrial metal sector – which was accountable for 10 percent of Iran’s export revenues.  India and Turkey announced an end to Iranian oil purchases, the other countries had already ceased.  Only China continued purchases against US sanctions.  In July 2019 sanctions were imposed on a Chinese company and its CEO for transporting Iranian oil.

In August 2019, the US government offered rewards of up to $15 million for information leading to the disruption of the IRGC and its Qods Force, or concerning maritime activity involving Iranian oil transfers.  In September 2019, after Saudi oil production was temporarily halved by missile attacks from Ansarallah in Yemen, Trump placed further sanctions on the Central Bank of Iran.

On January 3rd 2020, the US assassinated General Qassam Soleimani in Iraq.  The response from Iran was missile attacks on two US bases in Iraq, injuring 100 US troops.  The US embassy in Baghdad also came under attack from the Iraqi Popular Mobilisation Forces whose deputy commander Abu Mahdi al-Muhandis was also killed in the drone strike on Soleimani.  Although the US action contributed nothing other than the martyrdom, it demonstrated Trump’s refusal to engage in any manner with Iran.

In the run up to the 2020 US Presidential Election, Trump’s administration further accelerated sanctions against Iran – evidently playing to a section of US public opinion. Throughout 2020 there were new sanctions in almost every month, and some months had more than one round of targets.  These ranged from sanctions against senior Iranian officials, bodies of the Iranian state and sectors of the Iranian economy.  Foreign companies were sanctioned including some based in Brunei, China, Germany, Hong Kong, Iraq, Russia, Singapore, South Africa, Turkey, UAE and Vietnam.

UN sanctions that had been lifted by the JCPOA were unilaterally reimposed by Trump.  At the same time, he pressed the EU to trigger complaint mechanisms under the JCPOA against Iran’s alleged breach of the deal that the US had just exited.  Such chutzpah was perhaps only matched when media outlets were sanctioned for alleged interference in US elections.  This was a remarkable accusation given the US’s long history of interference in Iran’s internal politics.

In the course of his presidency, Trump imposed additional sanctions covering over a thousand persons and entities.  At the start of 2021, as his term ended, he was no closer to forcing Iran into a deal aligned to his pre-election concerns.  He had created great hardship and disruption, but failed against Iranian resilience.

Europe’s failure to defend the JCPOA

From the moment the US government withdrew from the JCPOA  the EU, and E3 governments (France, Germany, and UK) appeared reluctant to break with Trump or effectively act in support of Iran.  While attempting to maintain the agreement after the US exit, EU policy has been hesitant and lacked any convincing initiative. 

After Trump’s withdrawal in May 2018 there was a rapid collapse in Europe/Iran trade.  Under the threat of secondary sanctions firms cut back ties with Iran.  Renault and Citreon investments in a joint venture with Iranian partners fell through.  Scania withdrew from setting up a bus factory in Iran.  Siemans withdrew from a technology transfer agreement with an Iranian firm. 

“As of February 2019, monthly total European Union exports to Iran are down to EUR341 million while imports are down to EUR87 million, a fall of 55 per cent and 93 percent year on year respectively.” (46)  The fall in imports from Iran is so large because Iran’s oil sales were hardest hit.

The EU and E3 had two obligations here – firstly to defend their own firms trade with Iran; secondly to ensure that Iran continued to have access to European markets in defence of its compliance with the JCPOA.

In order to defend European firms, consideration was given in the European Commission to introducing legislation on Iran along the lines of the EU Blocking Statute of 1996.  This refers to the EU’s response to the US passage of the Cuba Liberty and Democratic Solidarity (Libertad) Act of 1996, also called Helms-Burton Act.  This Act imposes sanctions on non-US persons trading with Cuba.  It includes a section which allows US courts to prosecute non-US individuals found to be “trafficking” in property confiscated after the revolution.  This was a direct threat to EU investments in Cuba.  The EU Blocking Statute protected EU persons by giving them the right of clawback for damages suffered as a result of compliance with US sanctions.  Canada, Mexico and the UK also passed similar legislation.

Agreement was reached on this issue with the US via the World Trade Organisation (WTO).  Every president in office since 1996 suspended the section of the Act, Title III, which allowed for action in US courts.  Consequently no action was taken against EU firms trading with Cuba.

If some similar arrangement could be secured for Iran, then perhaps EU/Iranian trade could be retained.  However, in April 2019, Trump ended the suspension of Title III, in an effort to press Cuba to break links with Venezuela.  This resulted in lawsuits being introduced in US courts against EU trade with Cuba.  Of course, this also led to the EU dropping this idea for protecting Iranian trade – much of which had collapsed anyway by April 2019.

As no general legal protection on trade with Iran appeared possible, the EU opted for more modest goals.  This led to an effort to secure humanitarian trade with Iran via the establishment of a special instrument.  This was formulated as the Instrument in Support of Trade Exchanges (INSTEX), which would act as a clearing house for trade with Iran in humanitarian goods.  It is a wholly state owned, originally by the E3, but as of July 2021 by 12 European states.  Its focus is “sanctions exempt” purchases, medical and humanitarian goods.

It was a long time in generation, given the seriousness of the problems for Iran..The E3 governments made the first commitments in September 2018, and established the mechanism in January 2019.  But it was not until March 2020 that INSTEX actually delivered on the first transaction, facilitating the purchase of medical goods by Iran.  By this time it was clear that the mechanism would lave little impact on restoring the substantial losses Iran had suffered by the EU refusal to challenge US sanctions.  Indeed the first INSTEX trade had been preceded by the first use of a Swiss based payment system for humanitarian trade with Iran.

Meanwhile the Iranian government took steps to loosen the restrictions on its nuclear programme while adhering overall to the JCPOA.  This was a sign that it would not simply watch the collapse of its trade.  It wanted to see the US return, but it wanted the other signatories, particularly the EU, to deliver on the economic benefits contained in the JCPOA.  Every step away from its formal commitment by Iran to specific limits on uranium enrichment were greeted with regret by the EU, but to little end.

The US and the EU have the largest bilateral trade and investment relationship in the world.  The US sanctions imposed after 2018 effectively excluded Iran from both sides of this market.  The EU has made itself singularly vulnerable to US sanctions.  In this instance it was Iran that suffered.  But the impact of US sanctions on Russia, as part of NATO’s proxy war in Ukraine, shows that this vulnerability is now damaging the EU, and European economies.  Europe’s failure to defend its trade with Iran is ultimately a failure of Europe to defend itself.

Impact and adjustment in the Iranian Economy 

“If there is an art we have perfected in Iran, and we can teach to others for a price, it is the art of evading sanctions.” Mohammad Javed Zarif Iranian Foreign Minister (47)

Despite the persistence of the aggressive blockade against Iran, both the Islamic Republic and Iranian civil society have survived and developed.  Through resilience and ingenuity, the Iranian people have met the challenge of imperialism.  However, it would be an insult to that resilience to underestimate the embargo’s real damage to all aspects of Iranian society and social development.  It is important to both examine Iran’s resilience and the damage done.  This section will focus entirely on the impact of the combined US and multilateral sanctions before the JCPOA, and the renewed US sanctions after Trump’s JCPOA withdrawal.

Macroeconomic impact

The total cost of sanctions on the Iranian economy may not be possible to quantify.  In an interview with Press TV on 21st February, 2021, Mohammad Javad Zarif suggested US sanctions had cost the Iranian economy $1 trillion.  Certainly the damage to Iran’s development has been extensive.

Isolating Iran from world markets has meant limiting Iran’s growth, lessening the range of imported commodities, and making consumption more expensive for Iranians.  The restrictions on exports, particularly energy, has reduced government revenues. 

The blocking of capital inflows into Iran has meant less foreign investment, less access to scientific and technological developments, and limited opportunities for reskilling Iran’s workforce.

The isolation has also severely weakened Iran’s currency.  This has reduced access to foreign currency – a problem compounded by the seizure of Iranian assets abroad.  Nor has this simply lead to a deterioration in the terms of trade – imports becoming more expensive and exports less profitable in real terms.  It has also created huge inflationary pressures in all areas of Iranian commerce.

“In recent years, Iran has experienced two major rounds of exchange rate depreciation, which, together with considerable growth in liquidity, have fed inflation… These depreciations occurred after imposition of sanctions by the U.S., UN and others in 2012 in connection with Iran’s nuclear program, and after the far more severe sanctions reimposed by the U.S. in 2018.  These sanctions have led to sudden account stops, as well as capital outflows… Additionally, a sharp exchange rate depreciation occurred in 2020, because of the drop in global oil prices resulting from the pandemic and interruption of international trade, as well as non-repatriation of proceeds of non-oil exports.” (48)

To survive these problems, the Iranian economy has had to adapt.  This has involved securing new markets, both legal and covertly evading sanctions.  Firms have had to adapt production to less optimal supply, and loan capital from restricted providers.

Recovery from economic crisis, whether war, recession or sanctions, has primarily been based on national resources.  US sanctions have cut it out of access to not just the settlement systems of the dollar, but also the institutions of international finance.  It has been prevented from joining  the WTO on every occasion that it has applied since 1996.  The only World Bank support payments since 2005 have been two Covid emergency payments in May 2020 and December 2021.  It has not been able to draw on its own resources in IMF reserves due to a US veto since the establishment of the Islamic Republic.  It sought special drawing rights for its Covid emergency, but had this vetoed by Trump.

Reskilling and educating the workforce has to be done domestically.  At the same time, the continued problems of post graduate unemployment has cost it a large emigration of skilled, and highly skilled, Iranians who can only find permanent employment abroad.

Various methods have been used to sustain the currency’s value.  Currently, there are three exchange rates for the rial; one based on official exchange; one subsidised to assist with essential trade; and a competitive rate tied to domestic money changers.  The exogenous shocks of sanctions still shake the currency.  But flexible exchange rates, and other government policies, provide resilience.

“Iran’s economy has long experienced high inflation and there are structural reasons for this.  Yet numerous studies have established that the particularly high levels of inflation experienced in Iran since 2012 are attributable to the impact of sanctions.  Multiple mechanisms exist by which sanctions work to stoke inflation in Iran.  First, sanctions constrain government revenue, leading to budget deficits that need to be financed through expansionary monetary policy – printing money.  Diminishing oil exports, and thereby oil revenues, are the most widely cited example of the impact of Iran sanctions… during both the Obama adminstration, where sanctions targeting the oil sector were applied multilaterally, and during the Trump administration, where oil sanctions were applied unilaterally, sanctions have been effective at cutting Iran’s oil exports by around half.” (49)

However, there has been a long process of diversification in the Iranian economy, in response to the vulnerability of oil exports, and through government support.  “Iran’s economy is not dependent on oil and is more diversified than widely assumed.  Within this period [2011-2020], the oil and gas sector never accounted for more than one-third of GDP… At its nadir, it accounted for just 7 percent of GDP.  Today, as Iran remains under sanctions, the country’s real estate sector, manufacturing sector, and retail sector are each just about as important contributors to GDP as the oil industry.  Moreover, relative to the oil industry, these sectors are a greater source of employment in the Iranian economy – more households depend on jobs in these sectors for their livelihoods.” (50)

It may be thought that the efforts to isolate Iran would prompt a response towards self-sufficiency based on autarky, an acceptance of national isolation.  In fact the response has been to find different paths to the world market, rather than retreat from it.

“The push for economic complexity began in earnest in the early 2000s… Manufacturers began to produce new, higher quality products, initially intended for the large consumer market, but as local firms and local joint ventures gained market share (often at the expense of imported goods), they began to target export markets. …In 1998, Iran had just 98 export partners and 67 import partners.  A decade later it was exporting goods to 157 countries and purchasing them from 119 countries – growth that speaks to the remarkable forces of globalisation” (51)

Alongside the expansion of market partners came an expansion of commodity complexity.  “In 1998 there were just 18 major export categories including oil-related products, from which it was earning more than $25 million in annual export revenue.  By 2008 that number was 63.  Production of these goods required increased imports of raw materials and intermediate goods, such as parts and machinery, a need reflected in growth in the number of major import categories.  In 1998, these were 49 in which Iran was spending more than $25 million a year.  By 2008, these were 187.” (52)

This adaptation also reinforces a key change in the economy brought about by the revolution, a reorientation of state policy towards the rural masses and poorer Iranians generally.  “The main shift in policy after the revolution can be characterized as from urban-based and elite-centered to rural-biased and populist.  Populism in the Islamic Republic has a natural origin – the huge oil boom of the 1970s – which gave Iran a windfall in terms of a large inflow of foreign exchange … In the five years before the revolution, 1974 -1979, oil revenues had exceeded one trillion dollars (in 2018 dollars), about $5,000 per person per year.  However, within a decade, population growth, falling oil prices, and lower oil production made delivery on populist promises very difficult.  During the second oil boom, 2003-2013, oil revenues per person had declined to one fourth of their value in the 1970s and by 2018 they were one-tenth of their 1970s value.” (53)

But if oil revenues initially fuelled this “populism”, their  decline under sanctions has not eradicated the solid achievements.  “The pro-rural and pro-poor approach of the Islamic Revolution did make its mark on Iran’s economy and society, by building infrastructure that has all but eliminated the rural-urban divide, a relic of Iran’s feudal past.  … After the revolution, expansion of basic services, such as electricity and clean water, which had become the norm in pre-revolution urban Iran, accelerated in rural areas.  By 2000, these services had become universal, and household amenities – such as washing machines and air conditioners – had expanded significantly. …Expansion of health and education to rural areas sharply reduced poverty.  The poverty rate, which had exceeded 25 percent in the 1970s, fell to less than 10 percent in 2014.” (54)

This dynamic follows on from the social dynamics of the revolution and war.  The new state bodies drew in revolutionary activists into the Islamic Guards (IRGC) and the new endowed institutions who had a welfare/charitable purpose (the bonyads).  These bodies are effectively part of the state while establishing mass memberships and wide networks.  The radical projects of these bodies have included substantial economic activity.  This breaks with western liberal and conservative theories on the correct role of the state in the economy.  Hence the endless vituperation from imperialist circles against “unaccountable” bodies in the state apparatus.

“Though the industrial assets of the old capitalist elite were nominally ‘nationalised’, they were only partly controlled by the government as the bonyads (religious foundations) took charge of a considerable proportion of these assets.  These para-state organisations took possession of the properties confiscated by the Islamic Revolutionary Courts in the immediate aftermath of the Revolution.  The most important and influential of these, the bonyad-e mostazafin (Foundation of the Oppressed) was established in 1979 under the orders of Khomeini to take control of over 200 confiscated industrial, agricultural and trading corporations previously owned by the Pahlavis.  By 1983, it owned over 200 factories, 250 trading companies and 45 agro-industrial complexes, and by 1985 the companies owned by the bonyad-e mostazafin numbered over 600.” (55)

The contributions of these bodies to national reconstruction and development are very important.  Eric Lob’s book on the Reconstruction Jihad (RJ) makes it absolutely clear how the practical mobilisation of social and material resources under state deployment raised services and living standards of the rural population.

Such bodies remain anathema to western imperialist circles. Firstly, nomiclature needs to be clarified, beginning with “jihad”.  “…in the case of RJ and contrary to popular perceptions in the West, the term did not exclusively equate with holy war, but a divinely inspired collective and individual struggle to improve society (the smaller jihad) and the self (the larger jihad) through rural reconstruction and development and other positive and productive pursuits.” (56)

Secondly, the actual functioning of these bodies have provided for the welfare provision and economic needs of Iranian society.  The never-ending narrative of “regime corruption” and “new elites” by pro-imperialist sources is a screen to hide these achievements. 

“The components of this martyrs’ welfare state most alien to Western observers, such as bonyads (endowed foundations) that engaged in both welfare functions and economic production, draw attention away from the organizations that were most utilized by large segments of Iranian society that had been marginalized by the monarchy’s corporatist welfare system.  An expanding university system opened slots for individuals with newly acquired revolutionary credentials.  The Imam Khomeini Relief Committee, a poverty alleviation organization, gave aid to households of the rural elderly, widowed and single mothers, and refugee families.  A primary-health-care clinic spread across the countryside and trained locally embedded health workers to manage the health needs of a large segment of the population.  Even the notorious bonyads such as the Foundation for the Dispossessed and Martyrs provided care and income support for disabled veterans and their extended families.  These were all institutional innovations that did not substantially exist before the revolution, and they contributed to a decommodification as well as a defamilization of the social reproduction of households and livelihoods.  State networks of welfare partly replaced increasingly more precarious kinship and market networks of support.” (57)

The state controls a large section of the Iranian economy, both directly and indirectly through the activity of the bonyads.  That has given a great sturdiness to Iranian economic policy.  Even the privatisation programmes of successive Iranian governments haven’t changed this. Indeed these have often seen transfer of ownership to IRGC affiliated bodies, or the bonyads.  This may not suit western tastes for ownership by small numbers of wealthy people. 

Of course this pattern of ownership has its Iranian critics. “Even when a genune denationalization has occurred, as in the case of banking, private entities have not been able to match their state rivals.  By one estimate, for example, in 2014 the country’s 17 private banks had some 2,780 branches around the country but these were fewer in number than just one state bank.  According to some official estimates, in 2014 nearly 70% of the economy was controlled by the state, while the state enterprises budget still amounted to 53% of GDP.  However if the vast ownership of the bonyads and their affiliated conglomerates, the extensive business holdings of the IRGC, and Khamenei’s multi-billion-dollar controlled business empire (called Setad-e ejrai-ye Farman-e Hazrat-e Emam) were added to those of the public sector proper, total public control might exceed 80%.” (58)  The author is a former Minister and Ambassador for the last shah, and has trouble recognising any substantial improvements since 1979.  While there is a degree of exaggeration in the “80%”,  it is certainly a considerable proportion of the Iranian economy, and has aided its resilience.

Private capital has also been forced to adapt under the US embargo.  “Since sanctions typically impede target-country firms’ access to international finance, technology and imports, it is natural to expect their production costs to rise and outputs to decline.  Firms are also likely to be negatively affected on the demand side, as export opportunities are restricted and darkening economic prospects reduce investment as well as household incomes and expenditures.  Whether the tightening constraints are on the supply side or the demand side, or maybe both, many firms are likely to end up producing at a reduced scale, which could raise the per unit production costs and compound the problems in industries with economies of scale.  However, for some industries and firms, the restrictions on imports may counteract with these tendencies as import limitations shift the demand toward domestic producers of import substitutes, thus helping some firms to expand while others are contracting.  Similarly, sanctions are likely to induce substantial currency depreciation, which could encourage production of exportables and import competing products.” (59)

This author, Hadi Salehi Esfahani, summarises the shifts within manufacturing.  The impact of sanctions has been to create a rebalancing based on adaption to new market conditions.  “…in some important ways Iranian manufacturing firms have proved resilient.  Exit rates have not been particularly high, and manufacturing employment has actually increased during both episodes. [i.e. Obama and Trump sanctions]  The firms seem to have adapted to sanction conditions, particularly by shifting toward products that rely more on domestic resources and less on imports and foreign technology.  They have even gradually found ways to grow.” (60)

This rebalancing is further examined in the study by Marcus Solarz Hendriks.  Successive Iranian governments, through a series of Five Year Plans from 1989, have made diversification from oil a priority, with non-oil industrial development central.  In general, this has registered notable progress.  Non-oil exports were valued $1.3 billion in 1990, representing just 7% of total exports.  In 2011, the figures were $24 billion, representing 18% of total exports.

The composition and direction of exports also changed.  In the first period, from 1990 to 1999, raw goods and traditional manufactured goods, especially carpets, dominated.  In the period 1999 to 2011, the growing complexity and range of exports is evident – with petrochemicals, fruits and nuts, machinery and appliances, unmanufactured iron and steel all exporting more than carpets.  Equally, the direction of trade shifted significantly from the advanced economies towards developing economies, particularly in West and Central Asia, India and China.

What is evident is that this success was achieved despite the great disadvantages that Iran was experiencing.  “… Iran’s degree of regional trade success was realised on a country-by-country basis rather than across an entire bloc.  For example, Turkey based trade vastly outperformed the Middle East as a whole.  This demonstrates that Iran’s bilateral trade strategy had greater efficacy than its multilateral relations, which is consistent with a country battling international ostracism and financial sanctions.” (61)

One interesting area of bilateral trade strategy is its relations with Cuba and Venezuela, themselves under severe sanctions.  Initiated by Venezuelan President Hugo Chavez and President Ahmadinejad in 2007, this relationship has developed and endured under President Rouhani and President Raisi.

“With the administration of Donald Trump focused on further choking the economies of Iran, Venezuela, and Cuba, the relationship between the three countries has proven stronger than ever.  At the height of Trump’s “maximum pressure” campaign, Iran captured international headlines when it delivered six oil tankers to Venezuela to address chronic shortages of gasoline in the country due to U.S. sanctions.  In another defiant move, Iran and Cuba have entered a joint venture to develop and distribute a COVID-19 vaccine, which is currently in its final phase of human trials.” (62)

In her fascinating study, Bajoghli identifies the strength of the relationships as based on the common interests of states being sanctioned.  The risks of breaking sanctions require close cooperation frequently beyond the management of firms, thus requiring state assistance.  This is the most obvious for such long distance trade.

Bajoghli goes further than identifying the brickwork of this relationship.  She examines the cadres in Iran, Venezuela and Cuba who cement the relationship.  From the Iranian side, she identifies thus: “…Iranians’ relationship with their Venezuelan and Cuban counterparts “stick” because, beyond ideology, the striver cosmopolitans from each country share similar class and status positions that have allowed them to forge strong solidarities and a shared goal of ascending within their respective societies.” (63)

These she identifies as the people who have made “…this relationship move from anti-imperialist revolutionary rhetoric to close relationships that have included trade in a multitude of industries (including transportation, energy, infrastructure, biotechnology, and agriculture), a robust Iranian Spanish language media outlet, the development of a COVID-19 vaccine by Iran and Cuba, and active educational and cultural exchanges among the three countries.” (64)

The activists who visited Latin America, secured relationships between businesses and state institutions, learnt the languages, established businesses on the ground, etc., were not drawn from the traditional, overseas-educated sections of the intelligentsia.  The latter were more likely to have relationships linked to advanced economies.  “Instead, these partnerships were being driven by those loyal to the Islamic Republic and often from sectors within that demographic who did not have long-standing relationships with the west, whether through education or family immigration patterns.” (65)

The fact that these important connections have been established by a section of Iranian society who have a more “organic” connection to the revolution confirms the continuing innovative power of the revolution.

The rebalancing of the Iranian economy was also largely achieved without Foreign Direct Investment (FDI).  Iranian state industrial investment increased at an average rate of 19.8% between 1989 and 1997.  This gave a great boost to economic revival.  Coupled with the internal rebalancing of firms, the economy experienced sustained economic growth before the impact of Obama’s and Trump’s sanctions.  FDI represented a negligible element in this.  According to World Bank data, FDI in Iran as a percentage of GDP was static between 1-2% from 1990 to 2012.  In comparison, Turkey averaged 4% and Malaysia 5% in the same period.”(66)

The post 2012 FDI data shows even more limited flows.  Between 2012 and 2020 the annual figure was less than 1% for every year, with the sole exception of 2017 (the high point of post JCPOA boom) when FDI reached 1.1% of GDP. (67)

Iran’s energy industry has been subjected to greater restrictions than any other sector of the Iranian economy.  The value of these resources is one obvious explanation.  Iran has the second largest natural gas reserves in the world, behind Russia.  And Iran has the fourth largest oil reserves, behind Venezuela, Saudi Arabia and Canada.  From imperialism’s perspective, cutting off energy sales reduces the Iranian government revenues, hindering the government’s ability to engage in all activities from industrial investments to providing access to health services.

As examined earlier, Iran had already experienced sanctions against its energy industry.  That experience, and later ones, have forced the Iranian government to address the vulnerability of the industry, and the need to diversify income streams.

“In 1951, the British government imposed an oil embargo, after Iran attempted to nationalize the Anglo Iranian Oil Company (AIOC, future British Petroleum).  The embargo starkly revealed to Iranians a major vulnerability: they were unable to transport their own oil to global markets.  Today Iran has one of the largest oil transport companies in the world, with at least 42 Very Large Crude Carriers (VLCCs).  The National Iranian Tanker Company (NITC) had a vital role in transporting Iranian oil to international markets during the Iraq-Iran War (1980-1988) and in circumventing the European Union and U.S. export sanctions between 2006 and 2016.” (68)

The oil industry, like much of the Iranian economy, was seriously disrupted during and after the revolution.  One of the longest general strikes in the oil industry’s international history contributed to bringing down the last Shah.  Production dropped from 6 million barrels per day (mbpd) in 1974 to 1.3 mbpd in 1981.

This reduction was not however a simple matter of the revolution and war’s by-product.  During the revolution the mass demonstrations demanded conservation of the country’s oil resources, the revenues from which had been used to feed regime corruption, massive military spending and the vanity projects of the royal family.  The revolutionaries opted to cut oil production.

“Upon seizing power, the Provisional Government of Mehdi Barzagan decided to reduce oil production from its height of 6 million barrels per day to around 4 million.  Although the revolutionary upheavals and strikes by oil workers had halted oil production, it was a conscious decision by the Provisional Government to reduce the level of oil production to around 30 percent below its average level over the 1971-1978 period … This was the first time that an Iranian government had managed to control the level of her oil production, and the 1973 agreement between the Consortium and National Iranian Oil Company (NIOC), which bound Iran to production and sales at a discount to the Consortium, was cancelled in March 1979.” (69)

However, the impact of the war, and the US investment and technology transfer bans from 1996 meant that the 1979 target of 4 million barrels production per day was not met until 2003. 

By comparison, oil exports were relatively stable for much of the period.  Exports reached 2 mbpd in 1983, only to fall as a result of the US led ‘tanker war’ to around 1.4 mbpd in 1987.  With reconstruction, oil exports rose back to 2 mbpd by 1989, and remained between 2 to 2.5 mpbd until 2012. Then the US/EU sanctions caused exports to fall to 1 to 1.5 mbpd. (70)

This severe shock formed part of the recession that followed.  The signing of the JCPOA in July 2015 opened an immediate economic revival in Iran, including for the oil industry.   Within months Iran regained its oil market share prior to the imposition of multi-lateral “nuclear” sanctions. 

The industry registered another shock with the US government’s withdrawal from the JCPOA in 2018.  “In April 2019, upon expiration of the 180 day waiver, President Trump announced that the U.S. would not issue any new waivers for Iranian oil.  Japan, South Korea and India halted and China significantly reduced purchases.  Iran’s formal and direct oil exports dropped from 2.5-2.7 mbpd in early 2018 to 380,000 bpd in June 2019, and production was reduced from nearly 4 mbpd prior to reimposition of sanctions to 2.3 mbpd.  Oil exports fluctuated, in some months as low as 200,000 bpd, in others as high as 500,000 bpd until January 2020.  From January 2020 to October 2020, Iran’s average oil export was about 478,000 bpd and its average oil production was about 2mbpd.” (71)

Since the end of 2020 there has been a partial recovery of Iran’s oil exports.  This has come through sanction busting routes to China, mostly to the Chinese government purchases.  Iran’s current exports are around 1 – 1.5 mbpd.

The whole experience has further reshaped the industry.  After losing its export markets, in South Korea and Japan, for condensate form of natural gas, Iran has turned to consuming this domestically.  Refining capacity has been increased resulting in increased domestic consumption, and notably creating new synthetics for industry.  Iran also has the largest domestic market of any of the oil exporters in West Asia and North Africa, giving it the capacity to consume a higher proportion of its daily oil production.

The role of government in this is clear.  “The IRGC and its subsidiary companies have played a crucial role in circumventing U.S. sanctions and increasing Iran’s resiliency. Achievement of self-reliance in domestic gasoline production is a testament to this policy.  Iran today produces about 105 million liters of gasoline per day, 40 percent in refineries built by the IRGC’s Khatam-al Anbiya Construction Headquarters.  Gasoline production capacity surpasses domestic needs, creating the possibility of some export at a time when crude oil and condensate exports are under sanctions.” (72)

Further, to avoid possible export disruption should the Straits of Hormuz be closed, in 2020 the Iranian government announced the construction of a pipeline to the Jask port on the Gulf of Oman.  Sanctions drove away foreign contractors, so Iran constructed all the equipment and pipeline, including very wide sheets for the pipeline.  The latter had never been achieved in Iran before.

Of course, sanctions continue to squeeze the oil industry.  The World Bank reports: “Oil production has continued an upward trend since July 2020 when it registered a record low of 1.93 million barrels per day due to pandemic related slump in global oil demand and ongoing US sanctions.  The average oil production in Jan-Nov 2021 was 2.4 mbpd, almost the same level as 2019, but still far below the pre-sanction level of 3.8 mbpd in 2017.” (73)

Finally, a larger view on the macroeconomics of sanctions upon Iran has to include an assessment on environmental impact.  “Generally, these sanctions have impacted its environment by: restricting access to technology, services, and know-how; blocking international aid for the environment; and increasing the natural resource-intensity of the economy.  Sanctions have limited growth and ability to decouple the economy from natural resources, thus raising the role of natural resources in Iran’s political economy.” (74)

Iran has signed the Paris Climate Change Accord, but ratification is yet to follow.  All international connections which also bear upon relations with imperialism are subject to domestic tensions in Iran.  The reimposition of sanctions under Obama and Trump will not have helped disentangle the issues of essential international cooperation from opposing external coercion.

At the COP26 in Glasgow, Ali Salajegheh, head of Iran’s Department of the Environment made clear that the Iranian government was not opposed in principle to ratifying the Paris accord.  In an interview with the BBC he said: “Iran has been impacted by climate change like every other place in the world.  This has reduced our rainfall per annum and also the inflow of water into our rivers has been reduced by 40% … if the sanctions are removed, then we have a commitment towards the international community, it is at that time that they can transfer modern technology and finance to us especially in the area of renewable energy so we can modernise our deteriorating infrastructure.” (75)

Under coercive measures the priority for government will be to address the immediate needs of the population and maintain the country’s independence.  Inevitably there are choices made which involve actions which can aid the country’s survival, but in the longer term undermine it’s environment.  None of which is to justify particular actions which have damaged the environment – just to register that governments in heavily sanctioned countries must be accorded additional criteria when their actions are judged.

“Some of the evident signs of environmental degradation over the last four decades are increasing water shortages; drying rivers, wetlands and aquifers; air and waste pollution; soil erosion, deforestation, desertification, sand and dust storms; land subsidence and sinkholes; wildfires and biodiversity losses.” (76)

Sanctions have worsened these problems.  The overuse of water resources underlies a number of these difficulties.  “Agriculture withdraws more than 90 per cent of Iran’s water. Despite declining availability and frequent droughts, agricultural area and production have continued to grow to meet the growing food demand.  This growth that was greatly motivated by a food self-sufficiency agenda to minimize reliance on international markets would have been infeasible without the unsustainable use of water resources.  Total water use exceeds the total renewable surface and groundwater budget.” (77) Of course conservation policies need to be introduced.  But without restoring Iran’s access to world food markets such policies could reduce Iranian’s food consumption.

Equally, the isolation of Iran from technical exchange creates problems.  “…the South Pars refineries use a specific type of absorbents to remove mercury from natural gas.  Manufacturers such as Johnson Matthey and Axens have refused to sell absorbents IT to Iran.  As a result, mercury is not being properly removed from natural gas, damaging the environment with major public health implications at both production (refineries) and consumption (houses, offices, schools, hospitals, factories, etc.) points… There are numerous examples in the vehicle manufacturing and transportation industry, with major environmental implications for emissions.  Iranian car manufacturers have continuously postponed adopting the Euro 5 emission standard, blaming sanctions for their limited access to required technologies.” (78)

International aid and assistance for the environment has also been reduced by sanctions.  “Aid and development funds, as well as cooperation with and receiving research/training support from intergovernmental agencies, are not subject to sanctions, but Iran’s access has become strictly limited.  The practical complexities that can arise during implementation of aid projects due to sanctions, the barriers to transfer of funds through official banking systems and strong U.S. political influence as a large donor to intergovernmental organizations are among the major obstacles to Iran benefitting from the funds and services of intergovernmental and international organizations.”  As an example, the reduction in Iran access to funds under the Global Environment Facility is given: “Influenced by sanctions, Iran funding was significantly reduced, starting with the fifth round (2010-2014), during which less than 15 per cent ($4.2 million) of the original allocation of $28.77 million could be utilized.  In round six (2014-2018), the $17.21 million allocation remained completely unused.  The $10.89 million allocated in the seventh round (2018-2022) has zero utilization to date.” (79)     

Welfare, wages and social reproductionIn her study, Arzoo Osanloo draws a parallel between the “shock therapy” of IMF/World Bank renown and the imposition of sanctions.  “In the Iranian case, we have to think about a different framework for the shock therapy – sanctions and thus lack of access – yet with a similar result, and with the express intention of isolating the government, its economy, and, intentional or not, the people.  Instead of opening towards foreign direct investment, the country is excluded; rather than forced into restructuring and international financing loans for bailouts, the government is denied access to financial resources and infusions of capital and, ultimately, compelled to currency devaluation that results in the plummeting of wealth, particularly for those without access to foreign currency.  These effects are passed on to private citizens, thus mirroring the experience of citizens in countries that experience neoliberal restructuring.  The results of the lack of circulation of capital, commodities, and trade, like those of austerity measures, are that people cannot be paid, pensions are slashed, and jobs are cut.  Inequality increases, particularly between those who have access to  a different currency (and overseas bank accounts) and those who do not.” (80)

Of course, the advocates of sanctions do not admit that sanctions have a terrible impact upon the general population, particularly those most disadvantaged and vulnerable.  Instead the favourite rebuttal is “regime corruption”, and “government mis-management”.  Whether these denials come from the Obama, Trump or Biden administrations they are equally hollow.  Isolating a nation from elements of the world market inevitably reduces the living standards of the population.  This has been understood for over a century now and it is ideological dogma to suggest otherwise.

Evidence coming from the actual impact of sanctions on Iran is definitive.  Shahrokh Fardoust explains: ” As a result of the economy’s contraction, the per capita real income of Iran’s citizens in 2019 was nearly 30 per cent lower than it would have been had sanctions not been imposed in 2012-2019. Moreover, real private consumption, which grew by about 5 percent a year during 1995-2011, declined by 1.5 percent a year during 2012-2019, a cumulative decline of about 12 percent.  The ratio of gross fixed investment to GDP fell by 11.3 percentage points, 2011-2019.  The last times private consumption and investment fell by such magnitudes were during the 1979 revolution and the 1980-1988 Iran-Iraq war.”(81)

Djavad Salehi-Isfahani confirms this analysis: “The effect of sanctions on the economy has been twofold, to limit the government’s revenues from oil exports and to cut the country’s trade with the outside world. Reduced export earnings cause devaluation, which fuel inflation and hurt household budgets.  Lower government revenues cause economic contraction, which hurts both consumption and employment.” And: “… average standard of living fell by 17.7 per cent during 2010-2019.  As a result, per capita consumption in 2019 had returned to its level in 2002.” (82)

Such cuts in the living standards of the population are not solely registered in basic consumption.  The loss of state revenues also reduces the capacity of government to underpin social reproduction by targeted welfare.  According to Nazanin Shahrokni: “…the effects of sanctions are shifted toward households, as the state can no longer guarantee income stability and has partially withdrawn essential services that traditionally alleviated some of the burden households (and, by extension, primarily women) had to bear.” (83)

Shahrokni’s study is based on interviews with women in Iran in 2020, and clearly outlines the complex impact of sanctions.  “The economic strains caused by sanctions have exacerbated the financial obstacles to starting a family … due to the toman’s collapse, family resources that could be used to enable younger adults to marry have been exhausted…statistical evidence confirms the decline in young people getting married as a result of sanctions and the associated economic hardships…Another key change relates to the declining percentage of births linked with the decision of married couples to postpone or even abstain from having children.” (84)

The “home” simply cannot cover the support being lost. “These developments have turned the domestic sphere into a “shock absorber”; home is where people turn for almost everything: support, care, entertainment, respite.  Yet the domestic sphere is not a bottomless well: unless the public and private sector inputs continue, human capacities will be destroyed, and their demise will eventually be reflected in the formal economy.” (85)

 The revolution created a major and extended debate inside Iranian politics on the best method to provide welfare and domestic support.  Kevan Harris’s valuable book summarises the position: “…after three decades of elite conflict, a general ideological consensus existed in the Islamic Republic for a mixed public/private social insurance model with poverty alleviation programs for the poorest Iranians.  It was a dual-welfare regime, comparable to the social policy systems in Brazil, Turkey, or Malaysia.” (86)

The effectiveness of this model is clear: “While Iran’s GDP per capita places it roughly in the middle-income levels of the world economy, along with countries such as South Africa, Iran has a de-jure social-insurance system equal to or better than in many other middle income countries.” (87) These countries which will not have faced decades of the intense sanctions endured by Iran.

In the context of the renewed bouts of sanctions from 2005-2013, and since 2018, Iranian governments have attempted to maintain this platform of support in the face of a growing crisis of welfare and social reproduction.  But the reduction in resources would test any government’s innovative capacity:  “At the macro-level, annual budgets over the past decade show that, even while overall government expenditures have decreased as a share of GDP, the relative shares spent on sectors linked to health, education and welfare have increased under the Hassan Rouhani administration (2013-2021).  In addition annual budgets show a relative decrease in defense spending coupled with a relative rise in spending on domestic security and public order.  At the micro-level, household survey data show stagnating coverage levels in the social insurance system and rising levels in the health system.” (88)

Even an observer as hostile to the Islamic Republic as Human Rights Watch has to recognise the progress Iranian government’s have made in healthcare provision.  “As of 2015, around 90 percent of Iranian citizens were covered by some form of basic health insurance.  Iran’s health insurance scheme offers subsidized medications for most diseases while covering most costs of treatment for patients with rare diseases.” (89) 

But as living standards come under pressure, and inflation reduces the value of government spending, so health care inevitably deteriorates. “Check-ups and routine visits to doctors and dentists are often postponed indefinitely, and health concerns are addressed only if deemed serious enough to warrant a visit to a health professional.  Proactive care takes a back seat due to resource constraints, with women frequently bearing the brunt of the risks …. Interviewees painted a grim picture of a shift from preventative health care to seeking only urgent treatment.” (90)

Kristy Lam writes; “Given the circumstances, the universal health care system has done relatively well in providing affordable healthcare to Iranian citizens.  The government has attempted on several occasions to dampen the effects of sanctions, such as reallocating greater proportions of the budget for healthcare, designating medical supplies as “essential goods”, and establishing a heavy subsidy rate for its imports.  However, these efforts fail to address inherent problems posed by sanctions, such as the unavailability of foreign goods.” (91)

Iran imports seventy percent of its medical equipment.  It has been more successful in building up its domestic pharmaceuticals industry.  But even here it feels the squeeze of sanctions. “Medicines that are patented or target rare diseases often have to be imported.  Even though imported drugs consist of merely 3 percent of pharmaceuticals consumed in Iran, they have constituted as much as 40 percent and 30 percent of the value of Iran’s medical market around the time of sanctions regimes in 2012 and 2018, respectively… As of 2014, more than 6 million patients were impacted by medical shortages…at least thirty-two drugs that are ‘essential’ according to the World Health Organisation were in short supply pre-JCPOA.” (92)

Further, even when Iran can secure the medications required the sanctions regime adds to the real cost of imported pharmaceuticals.  “Iranian importers are paying significantly more for each kilogram of European medication they purchase than importers in Russia, Turkey or Pakistan.” (93)  The source of this being in costs arising from additional transaction costs, payment delays due to problems of banking authorisation, and additional storage costs.

Yet, according to the US government, humanitarian and medical products are exempt from sanctions.  The problem is that financing such imports runs into the impact of US sanctions on the international finance system.  Banks and financial institutions in the US, and abroad, are completely wary of any financial connection with Iran for fear of falling foul of US sanctions.  This excessive caution, is commonly referred to in sanctions literature as “overcompliance”, an aversion to risk where there is none.  And without the financial intermediaries, purchase and sales cannot be effected.

“Overcompliance is not limited to US banks and financial institutions.  European banks have also refused to authorize transactions with Iranian companies since the Trump administration’s reimposition of sanctions…In the UK, for any transaction with Iranian companies, even the humanitarian ones that are exempted from sanction, I have to get involved in litigation on behalf of my clients who want to do business with Iran,” a sanctions lawyer who has represented European companies trading with Iran explained.  “Often when we threaten the bank with a lawsuit, the transaction moves forward, but sometimes we have to start the pre-litigation process.  This process is time consuming and sometimes leads to [foreign] companies deciding to not trade with Iran.” (94)

Nor does this simply impact upon the health trade.  In the earthquake disaster relief campaign of 2019, financial humanitarian aid  was held up by problems of overcompliance in making the financial transaction.  Countries which provided aid in kind were able to get through more quickly.

 And of course, Iran’s ability to deal with the Covid pandemic was  hindered by sanctions too.  Iran was the first country to face the pandemic under comprehensive sanctions.  Esfandyar Batmanghelidj charts a number of ways financial sanctions undermined Iranian society’s struggle against the disease. (95)  From the start there were difficulties in importing personal protective equipment.  The US government made adjustments to guidelines to humanitarian good trades, but this was not until June 2021, by which time alternative suppliers or domestic replacements were secured.  The freezing of Iranian assets in Iraq and South Korea delayed access to the purchase of vaccines.

Isolating Iranians from scientific and academic exchanges also undermines health provision.  Medical education has been seriously impaired by sanctions.  “The main aspects of medical education that are clearly impacted by sanctions can broadly be categorized as: clinical decision-making, when lack of access to most up to date medical devices for diagnosis and treatment of patients during residency can limit the scope of experience and training; difficulties in academic exchange and participation in research production due to risks and restrictions associated with travelling; increasingly prohibitive costs of membership in associations and of journals; as well as the perception of their identity as a doctor in connection to their own society and global community.  Indirect effects, however, are manifest in more insidious, perceptual and reputational matters, such as a sense of isolation from the international scientific community and of losing exchange or learning opportunities; or even more tangible outcomes such as Western academics being reluctant to travel to Iran for conferences or academic exchanges out of concern for consequences in the U.S.” (96)

Is it notable that while wages and welfare services were worsened by sanctions, employment did not suffer similar reductions.  Unemployment has been relatively stable.  According to the World Bank, unemployment stood at 11.6% in 2000, and at 11.5% in 2021. (97)  The current economic crisis may well see a more dramatic turn here.

“…total number employed grew from about 20 million in 2011 to 27 million in 2019, a 2.1 percent annual increase.  This exceeded the 1.1 percent growth rate of the prime age (20-54) population during 2011-2016.  Much of the increase was in services, which grew by 2.7 percent, followed by industry and agriculture, both 1.5 per cent.  The increase in the number employed in industry, the section most exposed to trade sanctions especially after 2018, indicates the positive effect of real depreciation of the national currency on local production.  But the employment increase did not overturn the decline in wages in real terms, which is why poverty has risen despite higher employment.” (98)

One associated issue here is that the increase in numbers employed has not been matched by an increase in labour productivity.  According to World Bank figures, GDP per capita in 2012 was $4946.50 while in 2020 it was $4883.6  (measured in constant 2015 US dollars).  Roughly equal value production with an increased workforce suggests that the normal process, defined by Marx as the growing organic composition of capital, is not operating efficiently.  This refers to the replacement of human labour hours by the more extensive deployment of advanced machinery and technology.  This is hardly a shock, given that sanctions have made it difficult for Iran to import the most advanced machinery and processes.  But it demonstrates another way in which sanctions have artificially hindered the evolution of the Iranian economy, to both the nation and the workforce’s disadvantage. 

Sanctions and Iran’s defence capability

In US imperialist, and allied circles, Iran is defined as a threat to world peace.  The fact that it is over 200 years since an Iranian government launched a foreign invasion counts for nothing in this rationale.  Having defined this ‘threat’, sanctions and the potential for military action, are constantly utilised by US imperialism and allies.  From such circles, diplomatic initiatives towards Iran are a rare visitor since 1979.

In this hostile context, Iran’s strategic thinking is characterised by Ariane Tabatabai as composed of three key ideas.  These are – “deep distrust of world powers and the international order”; “the need for self-reliance”; and “belief that the nation’s chief security policy is one of deterrence and constant defence”. (99)

An objective observer of the last two centuries would surely not have difficulty in grasping the raw material of such a doctrine.  And since the establishment of the Islamic Republic, the actions of imperialism have reinforced the doctrine by treating Iran as a hostile entity.  Yet as Tabatabai points out, there is a great deal of continuity in Iranian strategic thinking, despite the Pahlavis subordinating the country to imperialism’s geo-politics.

As referred to earlier, under the last shah Iran had been one of the twin pillars, along with Saudi Arabia, of US strategy in the region.  By the end of the 1970’s, US arms sales meant that Iran had the largest and best equipped air force in West Asia and North Africa.  It’s army was impressive, in size and technical provisions.  Based on foreign expertise, and a narrow loyalty to an absolutist monarchy, these formidable forces fell apart in the storm of revolution.

Since the revolution, US sanctions against the new regime have been absolutely consistent in preventing military sales and dual use technologies to Iran.  Iran’s existence as an independent state has been premised on overcoming its exclusion from advanced weaponry available to hostile neighbours, and distant enemies with a long reach.

“The revolution gutted the armed forces of the country and brought about significant changes to the command structures of the defence sector.  Most immediately, it led to important changes at the senior levels of the armed forces.  First, many of the royalists left Iran and went into exile following the Shah’s departure in January 1979 and the victory of the revolution just weeks later.  Desertions followed, affecting the army’s capabilities particularly badly.  Second, the revolutionaries actively purged the armed forces of “plotters,” “counterrevolutionaries,” and secularists. … In an effort to reduce the size of the Artesh’s [Armed Forces] top brass, between 30 and 50 percent of officers between the ranks of major and colonel were removed from active service…” (100)

Consequently, when the Iraqi army invaded in September 1980, the Iranian armed forces were in a terribly weakened state. “… Iran could only muster up two undermanned and under-equipped divisions and brigades against Iraq. … Iran only had 120 tanks with which to meet the initial attacks.  Furthermore, the computerised system tracking spare parts domestically had broken down during the chaos following the revolution, leaving the country with few to no spare parts for the majority of its planes, armoured personnel carriers, tanks and artillery.  Iraq overwhelmed Iranian resistance but soon became bogged down by small bands of Iranian fighters as Iranian society mobilized against the foreign invading force.” (101)

Alongside this, the balance of forces was worsened by the impact of sanctions, and previous dependence on foreign training and provisioning. “Embargoed, sanctioned, and cut off from the ancien regime’s suppliers and supply chains in the West, the revolutionaries found it difficult to operate many of the sophisticated items purchased by the Pahlavi regime and also faced serious difficulties in maintaining these weapons systems.  With a high rate of depletion in the early years of the war, the revolutionaries began cannibalizing the vast stores of weapons systems left behind by the Shah to keep the advanced weapons operational.  Alongside this policy, they also pursued reverse engineering of systems in order to understand the mechanics of the military supplies accumulated under the monarchy.  Through this process, they subsequently learned how to reproduce some of the necessary parts and how to adapt others to meet their more immediate battlefield requirements” (102)

What is important to register here is the resilience of the Iranian people immediately found expression in this apparently hopeless situation.  Firstly, the “small bands of Iranian fighters” filled the holes in the punctured army.  The growing mobilisation of Iranian society against the invader created the revolutionary guards who were to assume greater and greater responsibility for defending their country.  Secondly, the “cannibalization” and “reverse engineering” signalled a new phase of Iranian technical innovation.  This immediately sustained the nation’s defence, but also foreshadowed a lasting programme of work to achieve a replacement for redundant technology while under embargo.

“On November 2, 2012, one of Iran’s most senior military commanders, Brigadier General Hassan Seifi, proudly announced that the Islamic Republic had become self-sufficient in meeting all of the country’s defense-related needs.  With this came a higher degree of deterrence because it showed Iran’s adversaries that it had the capacity to defend itself and was not dependent on importing from third countries for its defense. … However, in 1997, 1999, and 2000, similar claims had been made by commanders of naval and ground forces.  Thus it is clear that the process has been ongoing, and, as military industrialization propels itself forward, there now seem to be few areas into which Iranian defense engineers and scientists will not venture.  As one of a handful of countries bent on military self-sufficiency, the regime seems determined to acquire, accumulate, and internalize as much know-how as possible, and to do so right across the spectrum of defense equipment.  The goal of meeting the country’s defense needs locally is in fact at the heart of the republic’s strategic plan.  What are particularly noteworthy are the military-industrial complex’s technological and diversification achievements.  Not only are Iranians learning from others, but they are also able to innovate and take local R&D from the drawing board to the factory floor.” (103)

However, the impact of the military embargo has limited Iranian access to the most advanced technology in crucial areas, particularly in aircraft.  The war nearly terminated the air force – in 1984, US intelligence estimates were that Iran had no more than eighty operational fighter aircraft, and less than 150 qualified fighter pilots.  Whilst there has been a rebuild since that time, the air force does not have the advanced aircraft available to Israel, Saudi Arabia, Qatar and the UAE.

This explains why the regime has placed so much emphasis on Unmanned Aerial Vehicles (UAV) – missiles and drones.  “With its aerial combat capabilities diminished and the number of highly trained flying and technical personnel reduced, a relatively easy way of compensating for its lack of aerial power has been the development of a wide variety of missile types, with different ranges, payloads, and accuracy.  UAVs have become the most recent , and relatively inexpensive, compensatory response.” (104)

This has developed to a favourable degree Iran’s defence capability.  “There is no reliable assessment of how much Iran spends in developing, testing, and fielding its ballistic missile program, but the advances the Islamic Republic has made suggest that it possesses one of the largest and most diverse missile forces in the Middle East region, if not the largest.” (105) As a spin-off from this, Iran is also one of a small number of states with a capacity to launch into space, having launched its first satellite in 2009.

Inevitably, this very success has drawn outrage from imperialism and allies.  Apparently, Iranian ballistic missiles are uniquely threatening to world peace, unlike those of other regional powers such as Israel and Saudi Arabia, who also possess air forces with much more advanced aircraft than Iran.  “…much like other key elements of Tehran’s defense doctrine, the missile program was not a novelty introduced by the Islamic Republic.  instead, already prior to the revolution, the Shah had pursued such a capability with the help of Israel.  The revolutionaries halted the ballistic missile program, as they did other defense programs, before resuming it during the Iran-Iraq War and in response to the swift and crushing US victory during the 1991 Persian Gulf War.  As a result, far from a drastic change in doctrine and policy, Iran’s missile program was instead an element of continuity.  What changed was the perception of the program outside Iran’s borders – although a number of experts tried to shed light on the nature, objectives, technical specifics, and limitations of the Iranian missile program.” (106)

Sanctions have impacted upon Iran’s security and defence programmes – not sufficiently to render it defenceless or become subjected to foreign domination.  Its ingenuity and resilience have protected it.  But the narrative around sanctions has prevented any objective assessment of Iran strategic posture, and expenditure.  This supposed “threat to world peace” is spending less in the 21st century, measured in constant 2016 dollars, than was spent at the time of the Shah (107).  It has one of the lowest defence budgets in the region, and certainly considerably lower in per capita terms than other Persian Gulf powers, such as Saudi Arabia, UAE and Qatar.

Even the Stockholm International Peace Research Institute (SIPRI), which provides authoritative data on global military expenditure, has overestimated its spending, by failing to use the correct exchange rate, and account for Iran’s severe inflation.

“SIPRI’s data suggests that Iran is spending even more than Israel, ranked 15th in the world with $24.4 billion in military expenditure in 2021.  The comparison with Israel – a country in which the military is constantly procuring the most advanced military equipment in the world, including with foreign manufacturers – is clarifying.  If Iran were indeed spending even more money, what could it possibly be spending all that money on?  Iran produces nearly all its military hardware domestically, has basically no heavy armour, no modern air force, no modern naval fleet, and few advanced weapon systems.  The country’s defence is primarily assured by a ballistic missile programme, which while impressive, is not a programme that costs nearly $25 billion to operate”(108) Using the most appropriate exchange rate, and adjusting for inflation, Esfandyar Batmanghelidj’s report finds Iran’s spending for 2021 was actually $4.5 billion, placing it outside the world’s top 40 military spenders, and that Iran’s military spending has been “flat” for two decades, “barely keeping up with inflation”.  

Looking East

The cumulative loss of markets in the imperialist countries has made inevitable a turn towards Eurasian and Asian integration for the Iranian economy.  Whilst by no-means abandoning the idea of regaining lost markets in the advanced economies, successive Iranian governments have developed a greater range of connections in markets to the east and north.

The development of Iran’s civil nuclear programme is one good illustration of this process.  The programme was established under the Shah, with US support as part of the ‘Atoms for Peace’ programme.  The main suppliers were Germany and the US. Japan was involved with a desalination plant linked to the first nuclear power plant in the region at Bushehr.

“At the same time, the Shah invested in a joint European venture, which sought to provide the consortium partners with enriched uranium needed to fuel their plants, while allowing them to remain compliant with the NPT’s provisions [Non-Proliferation Treaty]. As such, France – whose NPT nuclear weapon state status made it a safe bet from a non-proliferation perspective – would host an enrichment facility, built by the consortium members, and sell them the enriched uranium.  The venture was called Eurodif and Iran was one of six countries to invest in it.  But with the Shah’s collapse, the Americans, Germans, and Japanese left the country and its nuclear sector.  For its part, Eurodif suspended Iran’s participation and was no longer willing to provide it with fuel.  It took a decade for Tehran to receive the money it had invested back, and shaped the way  Iranian officials viewed collaboration with foreign states on its nuclear programme.  At the same time, Iran informed the IAEA of its plans to build a reactor powered by indigenous uranium.  After inspections, the Agency accepted to help Iran under its Technical Assistance Programme before pulling out following US pressure.” (109)

Once the Islamic Republic took the decision to revive the programme, in the mid 1980’s, it no longer had suppliers or partners with the technical expertise required.  It then drew upon the technical expertise of the nuclear scientist A Q Khan from Pakistan, and practical assistance from China and Russia.  After US pressure, China withdrew, but Russia became the primary supplier.  China returned as a partner, after the signing of the JCPOA.  Had Iran confined itself to its former imperialist partners then it would never had been able to develop its nuclear power programme.

Similar problems were experienced in oil and gas production.  International isolation has created a long standing problem of inadequate technology transfer, aging infrastructure and a lack of refining capabilities.

Attempts to draw in foreign investment and expertise through joint ventures with the advanced economies have fallen through under US pressure. Between 2000 and 2004, Iran was in serious negotiations with companies from Japan and France.  These included oil exploration rights, and gas field development.  These fell through.  Agreement was close with the French company Total to development the South Pars gas field, but US pressure prevailed. 

China stepped in.  “According to a European diplomat cited by the New York Times in early 2016 after Xi and Rouhani met, ‘Where we had to stand on the sidelines, the Chinese have been filling the void (…).  They are way ahead of us’. Exports (largely of crude oil) from Iran to China grew by 24 per cent and imports from China by 25 per cent, between the final round of UNSC sanctions in June 2010 and the JCPOA’s signing in July 2015 – by far the largest growth for Iran.  Bilateral trade between Iran and China reportedly stood above $33.8 billion in 2015, after peaking at approximately $52 billion in 2014.” (110)

But here too, Iran tried to avoid becoming too dependent on any one partner.  Russia also became an important partner in energy development. “… the National Iranian Oil Company (NIOC) signed a number of agreements with Russia’s Gazprom to develop South Pars in 1997.  In the 2000s, exploration, production, and distribution deals were concluded between Tehran and Gazprom and other Russian firms.  In that same period, the two countries also pursued joint ventures in oil and gas refining and export services.  At the same time, they also worked with Qatar to extract reserves in the Caspian Sea.  In 2008, the two parties signed an agreement to trade natural gas to increase export efficiency and profits.  And Russia also offered to help Iran exploit its oil and gas fields.  In 2009, the two sides signed cooperation deals at their eighth joint economic commission meeting, which included the creation of a joint investment company to facilitate their energy partnership.  During the nuclear talks, the two sides also concluded exploration and production and infrastructure development deals.  The deals were concluded despite Western opposition and US pressure to stop the Russians from working with the Iranians.” (111)

These examples demonstrate how developing nations are much more reliable partners than the imperialist powers.  Nor is the issue of reliability the only issue, as always respect and mutuality play a crucial role in international relations. “…according to Iranians, both Russia and China were more willing to transfer entire processes to Iran, enabling it to take steps towards its ultimate goal of becoming self-sufficient in a number of sectors, rather than having to continuously rely on foreign providers.  Western firms are often concerned about ensuring jobs remain in their markets or for their populations, whereas Chinese firms, for example, are interested in selling entire production processes.  Likewise, while the West is concerned about providing adversarial or unstable states with the full infrastructure and know-how to replicate the technology it possesses – not the least since that would make countries less dependent and, therefore more difficult to sanction and isolate – the Russians and the Chinese do not have such concerns.” (112)

Despite all these efforts, the Iranian energy sector continues to suffer from its relative isolation in the world market.  In a recent Bloomberg article, the Iranian oil Minister, Javad Owji, is quoted as saying “in the years ahead we must invest $80 billion.  In the absence of adequate investment we will be forced to import”.  The article continues: “Western Oil and gas companies largely abandoned projects in Iran after …Trump quit nuclear agreement… Iran had plans to build liquefied national gas terminals, with a view to shipping cargoes to Europe.  Last month, Iran revived these ambitions by inviting companies to submit proposals for the construction of …LNG units.” (113)

While the idea of returning to Western markets has never been abandoned, there has been a more systematic development of Iran’s relations to its near neighbours.  In relation to Russia, this covers a number of avenues: “…Putin has travelled to Iran three times since 2015, most recently in 2018.  In addition, Iranian President Hassan Rouhani has travelled to Moscow five times since 2014 on top of engagements between the two countries within multilateral forums, including the Russia-Iran-Turkey trilateral meetings on the situation in Syria, the Caspian summit, the Shanghai Cooperation Summit and the Eurasian Economic Union Summit (where Iran signed a free trade agreement with the union in late 2019).” (114)

 The latter agreement gives Iran access, with lowered tariffs, to a market with a GDP of $4 trillion. (115)

Similarly, Iran’s relations with China have become more complex and systematic.  “President Xi’s 2016 visit to Tehran resulted in the signing of the Comprehensive Strategic Partnership (CSP) between China and Iran.  CSPs are the highest level in the spectrum of partnerships in China’s foreign policy strategy.  In the Persian Gulf, only Saudi Arabia, the United Arab Emirates and Iran enjoy this framework of cooperation with Beijing.  Enlarging the picture to the whole Middle East and North Africa region, the only additions to this exclusive club are Algeria and Egypt.  Therefore, the 2016 meeting between President Xi and Iranian President Hassan Rouhani marked the official recognition of Iran as a crucial partner for China.  On the occasion, 17 memorandums of understanding on areas ranging from the Silk Road to infrastructural, scientific and cultural co-operation were signed by the two governments.” (116)

Equally, Iran’s recent ascension to full membership of the Shanghai Cooperation Council (SCO), at the Dushanbe summit in 2021, has strategic significance for Iran.  “… since its establishment, the SCO has had ambitions of opening a path for economic integration between China, Russia and the four Central Asian republics.  In 2017, India and Pakistan were admitted as members of the organisation, marking a spectacular expansion of the SCO.  As Russian President Vladimir Putin noted during the 2018 Qingdao Summit, the organisation comprises “one fourth of the world’s GDP, 43 per cent of the international population and 23 per cent of global territory.” (117) 

Doubtless Russia’s attempts to evade the impact of US sanctions over Ukraine will increase the importance of such links.  In January this year, the Iranian and Chinese governments announced the commencement of the comprehensive strategic partnership.  Since 2018, the renewed US sanctions have held back Chinese investments in Iran.  China played a vital role in securing the JCPOA and has been strongly supportive of its reestablishment via the Vienna negotiations.  But the continuing US campaign against Iran does hinder China/Iran relations.  ”  …even in the case of a return to the JCPOA, it is quite hard to imagine a flood of Chinese capital into Iran.  The uncertainty that will remain around Tehran’s short- and medium-term ability to be reintegrated into global financial markets and the political risk may keep deterring China from opening itself to Iran in a way comparable, for instance, to the mature relationship built with the UAE.” (118)

For the Iranian government it is essential to both keep options open for market reintegration and make actual commitments to given market openings.  As there remains a national sensitivity to Iranian independence these are difficult policy issues.  But it is not an accident that President Raisi made “look to the East” part of his election platform. 

“It is not necessary to weigh which prospect offered greater incentive to Tehran to come to terms with the international community on the nuclear issue: the re-opening of trade and investment ties with Europe; re-entry into the global financial system via lifting of US unilateral sanctions; or the prospect of expanded cooperation with China via “One Belt, One Road” and Chinese participation in Iranian industrialization.  All three are important for Iran’s development.  But the large size of China’s foreign currency reserves, its massive industrial capacity (even over-capacity), the extremely impressive record of development achieved by China over the last forty years, and the important role China has played in Iranian development since the 1988 end of the Iran-Iraq war suggests to this author that the China factor weighed heavily.” (119)

Various analysis of the cause of Iran’s shift to the JCPOA will doubtless continue to be offered.  What is certain, at the time of writing, is that the only lasting result of Iran’s participation in the JCPOA has been the benefits of Iran’s preparedness to “look East”.  Neither the re-opening of trade and commercial ties with Europe, nor Iran’s re-entry into the US dominated global financial system have yet been achieved.

An unfinished struggle and a continuing crime 

The Fourth Geneva Convention came into force in October 1950.  It concerns the treatment of civilians in times of war.  As sanctions are being utilised outside of a time of war, it seems obvious that the convention does not apply in peacetime.  This leads to an equally obvious problem.  If civilians are protected in a time of war, then this means that civilians are better protected in war than they are under sanctions.

Article 33 reads: “No protected person may be punished for an offense he or she has not personally committed.  Collective penalties and likewise all measures of intimidation or terrorism are prohibited.  Pillage is prohibited.  Reprisals against protected persons and their property are prohibited.” (120)

It is evident that the implementation of sanctions, outside of a time of war, conflicts with some of these provisions.  Civilians are clearly being punished for the alleged crimes, or failings, of their government.  “Offences” the vast majority will not have “personally committed” still result in their “collective punishment” and “intimidation”.  Apparently these are justified prices to pay in a time of “peace”, but intolerable in principle in a time of “war”.

Despite sanctions being incorporated into the framework of the UN from its founding, it is relatively recently that the use of unilateral sanctions has drawn out a general concern in the UN.  In 2014 the UN Human Rights Council established the first Special Rapporteur on the negative impact of the unilateral coercive measures on the enjoyment of human rights.

Since that time the Special Rapporteurs have constantly expressed concern that US sanctions have breached human rights and international law.  Idriss Jazary, the first Special Rapporteur spoke out against the US government’s use of the Helms Burton Act to allow law suits against European and Canadian companies investing in Cuba.  “The resort by a major power of its dominant position in the international financial arena against its own allies to cause economic hardship to the economy of sovereign States is contrary to international law, and inevitably undermines the human rights of their citizens.”  He responded to a report, from the US based Centre for Economic and Policy Research, that 40,000 people may have died in Venezuela since 2017 because of US sanctions. “It is hard to figure out how measures which have the effect of destroying Venezuela’s economy, and preventing Venezuelans from sending home money, can be aimed at ‘helping the Venezuelan people’, as claimed by the US Treasury.” (121)

More recently, Special Rapporteur Alena Douhan visited Iran between 7th to 18th May 2022.  She is preparing a final report for the Human Rights Council in September 2022.  She gave her preliminary findings in a statement to a press conference in Tehran on 18th May.

Amongst her remarks, she said: “Unilateral sanctions have been reported to have multifaceted negative impact on Iran’s economy and almost all sectors… Iran’s GDP went from growing 3.8% in 2017 to minus 6.8% after the U.S. withdrawal from the JCPOA and minus 6.3% in 2019, before the COVID-19 outbreak, while it showed sign of slight recovery in 2020 and 2021.  Interlocutors highlighted the inflationary consequences of sanctions, with spiking prices in basic goods and services, as well as medicines and medical devices, challenging the government’s capacity to support those in need — Poverty rates have been rising with over 3 million new poor in the period 2017-2019.

“…a deterioration is observed in Iran’s national health standards with particular impact on children, despite reported Government initiatives to strengthen overall healthcare capacity through the development of medical and pharmaceutical self-sufficiency with the strengthening of local production and the increased number of general and specialized clinics, pharmacies, and hospital beds in 2018-2020.

“Of particular concern are significant challenges and obstacles in procuring and delivery of life-saving medicines and medical devices to treat rare and severe diseases, including certain cancers, thalassemia, haemophilia, multiple sclerosis, autism, epidermolysis bullosa (EB) and HIV/AIDS due to foreign companies over-compliance and restrictions on processing payments through the banking system and deliveries.

“…The economic hardships coupled with the pandemic, unilateral sanctions and over-compliance have led to a staggering rise in the number of people needing support, with a reported five-fold to eight-fold increase in the last two years.  The sharp fall in government revenues and private business donations and the inability to transfer international donors’ financial support have led to a decrease in governmental and non-governmental social support programmes.

“Sanctions and the resulting economic pressures also have a pronounced gender perspective. Economic sectors that traditionally employ women have been particularly affected and the increasing number of women have been particularly affected and an increasing number of women have entered the informal economy to respond to the financial needs of their households…women’s unemployment rate is approximately twice that of men… also concerns about the precarity of approximately 3 million female-headed households and the vulnerability of 9 million women who find themselves in low-income categories… Worsening economic conditions and bank transfer bans have also affected the elderly population.

“Iran hosts more than 5 million migrants and refugees, mostly of Afghan origin and undocumented, and in need of humanitarian aid.  The situation worsened after the 2021 Taliban takeover forced more than 850,000 Afghans to cross into Iran.  The Government has expressed its commitment to keep implementing inclusive policies, including equal access to education and healthcare.  However… the costs of humanitarian assistance have jumped almost 50%.

“…the state of emergency announced by the U.S. government in 1995 as the grounds for sanctions against Iran, last extended in March 2022 for another year, does not correspond to the requirements of art.4 of the International Covenant on Civil and Political Rights (ICCPR), such as the existence of a threat to the life of a nation, the limiting of measures to the exigencies of the situation, a limited duration, the absence of discrimination, and the prohibition to derogate from the right to life or to punish activity that does not constitute a criminal offence.

“… I am concerned that existing unilateral targeted sanctions as a punitive action violate, at the very least, obligations arising from universal and regional human rights instruments,…

“…applying extraterritorial jurisdiction to nationals and companies of third states for cooperation with Iranian public authorities, nationals and companies … is illegal under international law and increases the risk of over-compliance.

“…I call on sanctioning states, in particular the United States, to lift all unilateral measures imposed against Iran … I also remind that no good intention justifies the violation of fundamental human rights.” (122)

All that needs to be added is that it remains a particular responsibility of the anti-war, anti-imperialist movement in Britain to campaign for an end to British government complicity in this great injustice being inflicted upon the Iranian people.       


(1)  Karma Nabulsi, “Traditions of War”,  OUP 1999, page 4

(2)  Nicholas Mulder, “The Economic Weapon”, Yale University Press 2022, page 4

(3)  ibid, page 5

(4)  Mohammad Gholi Majd, “The Great Famine & Genocide in Iran” second edition, University Press of America 2013, page 78

(5)  Ervand Abrahamian, “A History of Modern Iran, Revised and Updated”, Cambridge University Press 2018, page 62

(6)  Mulder, page 84

(7)  ibid, page 286

(8)  Shashi Tharoor, “Inglorious Empire”, Penguin Books 2017, page 160

(9)  Jack Straw, “The English Job”, Biteback Publishing 2019, page 119

(10)  Homa Katouzian, “Musaddiq and the Struggle for Power in Iran”, I.B. Taurus 2009, page 139

(11)  Steven G. Gilpern, “Money, Oil and Empire in the Middle East”, Cambridge University Press 2013, pages 131-132

(12) Ervand Abrahamian, “Oil Crisis in Iran”, Cambridge University Press 2021, page 121

(13) Katouzian, page 146

(14) ibid, pages 145 -155

(15) ibid, page 155

(16)  Dr Mohammad Musaddiq, “Mussadiq’s Memoirs”, JEBHE, National Movement of Iran 1988, page 316

(17) ibid, page 316

(18) ibid, page 318

(19) Ervand Abrahamian, “The Coup”, The New Press 2015, page 164

(20) Nikki R. Keddie, “Modern Iran” Updated Edition, Yale University Press 2006, pages 126 -127

(21) Abrahamian, “The Coup”, page 165

(22) Ervand Abrahamian, “Iran Between Two Revolutions”, Princeton University Press 1983, pages 272 – 273

(23) Madawi Al Rasheed, “A History of Saudi Arabia”, Cambridge University Press 2014, page 113

(24)  Homa Katouzian, “The Political Economy of Modern Iran 1926-1979”, Macmillan Press 1981, pages 167 – 168

(25)  Suzanne Maloney, “We Used to Run This Country”, in Suzanne Maloney (Ed) “The Iranian Revolution at Forty” , Brookings Institution Press 2020, page 24

(26)  Seyed Hossein Mousavian, “Iran and the United States”, Bloomsbury Academic 2015, page 57

(27) Nader Habibi, “The Iranian Economy in the Shadow of Sanctions”, in Parvin Alizadeh & Hassan Hakimian “Iran and the Global Economy”, Routledge 2016, Page 176

(28) Maryam Panah, “The Islamic Republic and the World”, Pluto Press 2007, page 85

(29)  Saideh Lotfian, “Nuclear policy and international relations”, in “Iran in the 21st Century : Politics, Economics and Conflict”, (Eds.) Homa Katouzian and Hossein Shahidi, Routledge 2008, page 171

(30)  Panah, pages 114 – 115

(31)  Mohammad Reza Farzanegan, “What Were the Economic Costs of the Islamic Revolution and the Iran-Iraq War?”2, Bourse and Bazaar Foundation December 16 2020, page 8

(32)  Kate Hewitt and Richard Nephew, “The Revolution and Washington’s Reliance on Economic Pressure”, in Maloney (Ed), Page 98

(33)  Bruce Riedel, “Kings and Presidents”, Brookings Institution Press 2018, page 95

(34) Narges Bajoghli, “Iran Reframed”, Stanford University Press 2019, page 102

(35)  Suzanne Maloney,  “Iran’s Political Economy Since the Revolution”, Cambridge University Press 2015, page 195

(36)  Hooshang Amirahmadi, “Revolution and Economic Transition”, State University of New York Press 1990, pages 295 – 296

(37)  Evaleila Pesaran, “Iran’s Struggle foe Economic Independence”, Routledge 2013, page 73

(38) ibid, page 83              

(39) Ervand Abrahamian, A History of Modern Iran, pages 189 -190

(40)  Sajjad Dizaji and Mohammad Farzanegan, “Do Sanctions Really Constrain Iran’s Military Spending, Bourse & Bazaar Foundation, November 26 2018

(41) Mousavian, page 37

(42)  Trita Parsi, “Losing an Enemy”, Yale University Press 2017, page 184

(43)  ibid, pages 231 – 232

(44)  ibid, pages 244 – 245

(45)  ibid, page 316

(46) Esfandyar Batmanghelidj and Sahil Shah, “Protecting Europe-Iran Trade to Prevent War : A Provisional Assessment of INSTEX”, European Leadership Network and Bourse & Bazaar June 2019, page 4

(47)  Javed Zarif, “Interview”, Mehr News Agency, December 15, 2018

(48) Adnan Mazarei, “Inflation Targeting in the Time of Sanctions and Pandemic”, SAIS John Hopkins University 2020, pages 11 – 12

(49)  Esfandyar Batmanghelidj, “The Inflation Weapon” Fourth Freedom Forum 2022, page 9

(50) Batmanghelidj (2022), ibid, page 10

(51) Esfandyar Batmanghelidj, “Resistance is Simple, Resilience is Complex: Sanctions and the Composition of Iranian Trade”, SAIS John Hopkins University 2020, pages 8 – 9

(52) Batmanghelidj (2020), ibid, page 14

(53) Djavad Salehi-Isfahani, “Iran’s Economy since the Revolution”, in Maloney (2020), page 19

(54) ibid, pages 19 – 20

(55) Panah, ibid pages 115 – 116

(56) Eric Lob, “Iran’s Reconstruction Jihad”, Cambridge University Press 2020, page 312

(57)  Kevan Harris (2017) , page 219

(58) Jahangir Amuzegar, “The Islamic Republic of Iran : Reflections on an emerging economy”, Routledge 2020, page 24

(59) Hadi Salehi Esfahani, “The Experience of Iran’s Manufacturing Sector Under International Economic Sanctions”, SAIS John Hopkins University 2020, page 5

(60) ibid, page 34

(61) Marcus Solarz Hendriks, “Beyond Carpets and Dried Fruits : The Development of Iran’s Non-Oil Exports, 1990 -2011”, Bourse & Bazaar Foundation September 2021, page 12

(62) Narges Bajoghli, “Iran in Latin America : Striver Cosmopolitans and the Limits of US Sanctions”, SAIS John Hopkins University 2020, page 5

(63) ibid, page 6

(64) ibid, page 11

(65) ibid, page 13

(66) Hendriks, ibid, page 19 footnote

(67) World Bank website, Iran page 28th May 2022

(68) Sara Vakhshouri, “U.S. Sanctions and Iran’s Energy Strategy”, SAIS John Hopkins University 2020, page 5

(69) Kamiar Mohaddes and M. Hashem Pesaran, “One hundred years of oil income and the Iranian economy: A curse of a blessing?”, in Alizadeh & Hakimian (2016), pages 20 – 21

(70) Pesaran, ibid, Figure 7.2, page 184

(71) Vakhshouri, ibid, page 7

(72) ibid, page 20

(73) World Bank, “Iran Economic Monitor” Fall 2021, page 1

(74) Kaveh Madani, “The Unintended Environmental Implications of Iran Sanctions”, SAIS John Hopkins University 2020, page 4


(76) Madani, ibid, page 6

(77) ibid, page 7

(78) ibid, page 13

(79) ibid, page 17

(80) Arzoo Osanloo, “Entanglements: Lives Lived Under Sanctions”, SAIS John Hopkins University 2020, page 14

(81) Shahrokh Fardoust, “Macroeconomic Impacts of US Sanctions (2017-2019) on Iran”, SAIS John Hopkins University, 2020, page 36

(82) Djavad Salehi-Isfahani, “Impact of Sanctions on Household Welfare and Employment”, SAIS John Hopkins University, 2020, pages 3 & 9

(83) Nazanin Shahrokni, “Bursting at the Seams – Economic Sanctions and Transformation of the Domestic Sphere in Iran”, SAIS John Hopkins University, 2020, page 7

(84) ibid, pages 10 – 12

(85) ibid, page 20

(86) Kevan Harris, “A Social Revolution : Politics and the Welfare State In Iran”, University of California Press 2017, page 195

(87) ibid, page 153

(88) Kevan Harris, “Iran’s Government Expenditure Priorities and Social Policy Burdens During Sanctions”, SAIS John Hopkins University, 2020, page 4

(89) Human Rights Watch, “Maximum Pressure”, 2019, page 35

(90) Shahrokni, ibid, page 20

(91) Kristy Lam, “Collateral Damage : The Humanitarian Consequences of U.S. Sanctions on Iran”, New Degree Press 2020, page  82

(92) Lam, ibid, pages 83 – 84

(93) Esfandyar Batmanghelidj, “Why Iran Pays More for Each Kilogram of European Medicine”, Bourse and Bazaar, October 3rd 2019

(94) Human Rights Watch, pages 25 -26

(95) Esfandyar Batmanghelidj, “The Inflation Weapon : How American Sanctions Harm Iranian Households”, Fourth Freedom Forum 2022, page 16

(96) Orkideh Behrouzan & Tara Sepehrifar, “The Impact of Sanctions on Medical Education in Iran”, SAIS John Hopkins University 2020, pages 10 – 11

(97) World Bank website, Iran page, 28th May 2022

(98)  Djavad Salehi-Isfahani, (2020), ibid, page 30

(99) Ariane M. Tabatabai, “No Conquest, No Defeat : Iran’s National Security Strategy”, C.Hurst and Co. 2020, pages 298 – 300

(100) Gawdat Bahgat and Anoushiravan Ehteshami, “Defending Iran : From Revolutionary Guards to Ballistic Missiles”, Cambridge University Press 2021, page 52

(101) Tabatabai, ibid, page 197

(102) Bahgat and Ehteshami, ibid, page 77

(103) ibid, page 87

(104) ibid, page 105

(105) ibid, page 118

(106) Tabatabai, ibid, page 288

(107) Sajjad F. Dizaji, “Do Sanctions Really Constrain Iran’s Military Spending?”, Bourse and Bazaar, November 26 2021

(108) Esfandyar Batmanghelidj, “SIPRI Has Overstated Iran’s Military Spending For Years”, Bourse and Bazaar, May 5th 2022

(109)  Dina Esfandiary and Ariane Tabatabai, “Triple Axis : Iran’s Relations with Russia and China”, I.B.Taurus 2019, page 105

(110)  ibid, pages 100 – 101

(111)  ibid, page 103

(112)  ibid, page 111

(113)  Bloomberg, 20th April 2022

(114)  Mehran Haghirian, “The Rivalry Between Iran and the GCC States in the Eurasian Context”, in Esfandyar Batmanghelidj (Ed) “Iran’s Bilateral Relations in the New Eurasian Context”, National University of Singapore – Middle East Institute – Bourse and Bazaar publication 2020, page 13

(115)  Daniel Amir, “Israel and Iran – Thrust Together by Eurasia”, in Batmanghelidj (Ed), page 18

(116)  Jacopo Scita, “From Bilateralism to Multilateralism: Iran’s Place in China’s Eurasian Projects”, in Batmanghelidj (Ed), page 41

(117)  ibid, page 47

(118)  Jacopo Scita, Blog post, April 12 2022

(119)  John W.Garver, “China and the Iran Nuclear Negotiations”, in James Reardon-Anderson (Ed) “The Red Star & the Crescent”, C.Hurst 2018, page 145


(121)  UN Human Rights Office of the High Commission, Press release 6 May 2019

(122)  UN Human Rights Office of the High Commission, Press release 19 May 2022