America Still Has Iran Sanctions—And They're Hurting the Nuclear Deal
Mohammad Reza Amirkhizi
Economics, Middle East
Since January 2016, when the implementation went into effect, the lifting of sanctions has not benefitted Iran's economy as expected.
Years before the UN sanctions that prompted Iran and the Security Council to finalize the nuclear deal, there were substantial primary sanctions imposed by the United States. Those primary sanctions have been the topic of much discussion as they remain in place after the nuclear agreement and impact the effective implementation of the commitments made by the nuclear powers. This article looks at the primary U.S. sanctions and their impact on the successful implementation of the Joint Comprehensive Plan of Action (JCPOA).
Impact of the Sanctions on Iran
The intention behind the UN sanctions was to penalize Iran for its lack of cooperation with Security Council resolutions on its nuclear activities. In the final analysis, sanctions were intended to exert severe economic pressures on the Iranian economy, with the ultimate hope of forcing the Iranian government into an agreement. Iran faced challenging social and economic effects as the result of the sanctions. Iran's access to products needed for the oil and energy sectors was reduced and many oil companies withdrew from Iran. As the result of reduced access to efficient technologies, Iran also experienced a decline in oil production. With tightened sanctions and extension of the EU ban to ship insurance, major supertanker companies stopped loading Iranian cargo. The insurance ban affected 95 percent of the tanker fleet. As a result, Iran faced problem in finding customers for about 25 percent of its oil exports. While the level of oil export in December of 2011 was about 2.2 million bpd, it dropped to 860K bpd in September 2012. The result was a considerable increase in the rate of inflation due to sharp drop in revenues and sudden massive drop of local currency’s value. Iran’s oil income was further reduced by the increasing costs of obtaining its revenues while sidestepping sanctions imposed on Iran’s access to banking transactions.
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