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Sanctions Help, Not Hurt Iranian Regime

The prevailing narrative among those western nations and media supporting sanctions against Iran is that it is harming the regime by gradually depriving it of support in much the same way that a failing heart eventually deprives a body of oxygen. But what if everything they know about sanctions is wrong? Matthew Boesler has written an incisive analysis of the impact that sanctions are having on Iran. He makes an extremely persuasive case that they are helping, not hurting the regime.

In order to understand this counter-intuitive argument you have to begin with the pre-sanctions period.  During that time, the country sold oil and amassed considerable foreign currency reserves including dollars.  The argument by those who do not understand the Iranian economy is that hyperinflation will make the value of the rial worthless.  Eventually people will be pushing wheelbarrows full of cash in order to buy a loaf of bread as they did in Weimar Germany.

But this is wrong for a number of reasons.  First, Iranians do not buy bread in dollars.  They buy them in rials.  The price of bread in native currency isn’t increasing.  It is stable.  There are massive subsidies for those items deemed necessities.  Those subsidies protect the working class base of the regime’s support.  But they leave one major part of society vulnerable.  The middle classes.

The middle class wants more than bread.  It wants iPads, smartphones, and other desirable foreign goods.  It wants to buy them for personal use and it wants to import them to sell to others inside Iran.  This is the sector that is being devastated by sanctions.  These are the things Iranians will no longer be able to afford.

But the regime has never relied on the support of the middle class.  The merchants in the bazaar and the money changers are emblems of the middle class.  They are the ones who rallied in 2009 to bring down the regime.  They funded the protests.  They hate the ayatollahs.  So the regime does not need them.  It only needs the votes of the poor working class to stay in power.

So when you read the wishful thinking of Israeli leaders who crow about the coming downfall of the Islamist government, when you read the unsupported claims of David Sanger that sanctions are forcing the leadership to consider the price it is paying for its nuclear program–remember this article.  And tell the world that the prevailing narrative is all wrong, as it often is.  Sanctions don’t kill the regime.  They strengthen it.

If there is any theme to this blog it is that just about everything that the Israeli and U.S. leadership believes about its approach to the Muslim-Arab world is wrong.  It is based on assumptions that reflect our needs and prejudices rather than reality.  When we conduct policy based on what we want to happen rather than what will happen, then we’re headed for a fall.

The only threat to Iran that Boesler notes is that it can maintain this system just as long as it maintains its foreign currency reserves to pay for whatever basic necessities it does need to import.  If that runs out, then the game’s up.  But one should ask the west, do you trust that you can starve and strangle Iran long enough for that to happen?  And if you can’t, you’ve further cemented the ayatollahs’ ironclad domination of Iranian society for years, if not generations to come.

As Prof. Muhammad Sahimi wrote in a comment here earlier today, many of us want the current regime to fall.  We want an Arab Spring (or in Iran’s case, a Persian Spring) for Iran.  But regime change can’t come from the barrel of a gun.  It can’t come from black ops, manipulation and violence.  It must come from the will of the Iranian people.  It is their country, not ours.  We can’t tell them what to do.  We can’t force them to stop their nuclear program nor to establish a democracy.

{ 23 comments… add one }
  • Bob Mann October 7, 2012, 4:12 AM

    Sanctions cripple Iran’s middle class, not the regime
    Posted By Mohammad Sadeghi Esfahlani , Jamal Abdi Thursday, August 2, 2012 – 3:26 PM

    Instead of speculating from afar, we should listen to the Iranians on the ground who are actually struggling for democracy firsthand. The leaders of the Green Movement and Iranian human rights and democracy defenders have adamantly opposed broad sanctions and warned that confrontation, isolation and broad economic punishment only undermine the cause of democracy and rule of law in Iran. A new report by the International Civil Society Action Network (ICAN) documents how sanctions are destroying the sources of societal change in Iran. “The urban middle class that has historically played a central role in creating change and promoting progress in Iran are key casualties of the sanctions regime,” according to the report.

    As documented by the report’s firsthand account on the ground, sanctions are not driving the working class to join Iran’s democracy movement, they are doing the opposite — decimating the Iranian middle class, that has been at the center of the democracy movement, by intensifying their economic struggles. The greatest impediment for Iran’s pro-democracy movement — as we saw at the height of the Green Movement protests in 2009 — has been that working class Iranians who are preoccupied with immediate financial struggles are unable to enlist in a struggle for political freedoms.

    link to mideast.foreignpolicy.com

    Similarly incisive analysis with similar conclusions made over two months ago.

  • Avi October 7, 2012, 5:22 AM

    But only today I heard in the news that the Iranian parliament had opposed subsidy program presented by Ahmadinejad, which means there is no money to support the poor class also.

    • Alex. Illi October 7, 2012, 7:30 AM

      Pres. Ahmadinejad’s subsidy-reform-plan, now being somewhat opposed to by parts of the Iranian parliament, is to CUT the subsidies further, to increase the food prices, because he wanted to change the subsidies to direct cash payments to the citizens.

      So it seems from these article’s:
      Iran Committee Rejects Ahmadinejad’s Subsidy Cut Plan
      link to bloomberg.com
      Iran’s parliament to reconsider subsidy reform
      link to bbc.co.uk
      Ahmadinejad: Iran is successfully riding out sanctions
      link to jpost.com

      Quote from the latter:
      “Ahmadinejad defended his economic record on Tuesday, saying a phase-out of food and fuel subsidies that he launched in 2010, which has boosted the official inflation rate to around 25 percent, had been successful.”

    • Alex. Illi October 7, 2012, 7:49 AM

      On the contrary Pres. Ahmadinejad’s subsidy-reform-plan is to cut the subsidies for food.
      Ahmadinejad prefers to hand out cash instead of indirect food subsidies.
      So the decrease of subsidies has been opposed in Iranian parliament.

    • Aleph October 7, 2012, 2:36 PM

      Ahmadinejad’s reform plans are for subsidy cuts, he wants to decrease the subsidies.

      • Richard Silverstein October 7, 2012, 6:07 PM

        Not in this economic climate when there’s a crisis like this.

    • Richard Silverstein October 7, 2012, 6:09 PM

      Not true. Opposing something & doing away with it are two different things. They haven’t done away with it.

  • mary October 7, 2012, 7:22 AM

    Did sanctions strengthen Gaddafi or Saddam?

    • rfjk October 7, 2012, 7:32 AM

      Of course.

      It took the knock on effects of the ‘Arab Spring’ to overthrow Gaddafi, and as we all well know the US had to invade Iraq in 2003 after a decade of sanctions, no fly zone and bombing failed to do the trick.

    • Joel October 7, 2012, 12:59 PM

      They’re both dead.

      • Richard Silverstein October 7, 2012, 6:11 PM

        But sanctions didn’t kill them. In fact, sanctions strengthened their leadership as well. Qaddafi was overthrown by a popular uprising from within. Hussein by foreign intervention.

      • rfjk October 8, 2012, 8:41 AM

        …They’re both dead…

        And the Mullah’s will outlive Islamophobic neocons, Bush/Cheney, Netanyahu/Barak and the Romney/Ryan cluster you know what should they gain regency over the US.

        • mary October 8, 2012, 11:41 AM

          Should who “gain regency over the US”? Mullahs? Seriously?

          • rfjk October 8, 2012, 10:43 PM

            “Should who “gain regency over the US”? Mullahs? Seriously?”

            That’s sloppy thinking or maybe worse. “Should they gain regency” is specifically referencing a Romney/Ryan win on 6 November. I submit that another Republican regency will be many magnitudes worse than the multiple “strategic disasters” the Bush/Cheney team inflicted upon the US for decades, if not a generation or two.

          • mary October 9, 2012, 8:08 AM

            I’m not engaging in “sloppy thinking,” honestly I’m not following you. You’re going to have to explain it to me.

    • PersianAdvocate October 7, 2012, 4:05 PM

      Half a million Iraqi children died. Saddam had to be taken out by Shock & Awe. Libya is a big country with only 5 million people (thank God — if only to lower the death count). Who knows what the death toll was there and the damage?

  • Fillmore Hagan October 7, 2012, 10:20 AM

    People should remember that German hyperinflation during the twenties was a key factor in preparing the way for Hitler. An Iranian hyperinflation triggered by the global zionist power structure could trigger a wave of REAL anti-semitism in Iran and possibly other Moslem states. This might put Iran’s 30000 or so Jews in deadly peril. And since many of these Jews are middle class, they stand to suffer from the sanctions even without a surge of anti-semitism.

    if people think the current Iran regime is bad, try to imagine an Iranian Hitler.

    • Richard Silverstein October 7, 2012, 6:13 PM

      You haven’t even read the linked article which makes clear that Iran is NOT suffering hyperinflation. Inflation, yes, but not hyperinflation since many Iranian staples are heavily subsidized.

      I’m not partial to terms like “global Zionist power structure.” It’s nonsense as far as I’m concerned. Watch the quasi anti-Semitic tropes.

      • fillmorehagan October 8, 2012, 9:06 AM

        You are correct that Iran is not currently suffering from hyperinflation, but I’m afraid that is the goal of many of those pushing the sanctions regime. They might live to regret it if they get what they wish for.

        Yes perhaps the term “global Zionist power structure” can be taken as anti-semitic. But does anyone doubt that the current anti-Iran hysteria reflects to a large degree a push by AIPAC and its sister lobbies in Canada, Britain, and the EU all taking their cues from Likud?

        • Richard Silverstein October 8, 2012, 2:09 PM

          I have no problem with your second paragraph as you wrote it. There is clearly a global pro Israel agenda hawking war against Iran represented by Aipac, the Israel lobby, etc.

  • Tibor October 7, 2012, 1:06 PM

    “When we conduct policy based in what we want rather than what will happen …..” – that`s a tautology, unless of course “what we want” becomes “what happens”, or, if that is too ideal, that at least it should be be better than “what we have”.

  • PersianAdvocate October 7, 2012, 4:02 PM

    The upcoming Iranian presidential election could bring significant reform if it is not meddled with and allowed to flourish on its own. For this reason, it will be meddled with by pro-war factions. No one wants to attack Israel. Maybe in their wildest dreams, but that’s complete suicide. Israel has 400+ nukes and nuclear capable submarines. Despite mistranslated rhetoric, at best, to this effect being the basis for all complaints by Israel against Iran, no one is capable of “wiping Israel off the map” without actually being wiped off also. Except, the Palestinians.

    Netanyahu doesn’t want to talk about the Palestinians. The Balfour Declaration, preserving their rights in line with the subsequent establishment of Israel within the very black letter of the document, is being abused.

    • Bob Mann October 8, 2012, 12:05 PM

      Which candidate do you think would win the upcoming Iranian presidential election if it is not meddled with and what significant reforms do you think that person would bring?

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