Do economic sanctions work?

Over the course of the past week the world has witnessed the power of economic sanctions. Iran’s economy is crumbling under the restrictions imposed by the EU, UN, and US. Recently, the Rial has lost 40% of its value after having already fallen significantly since the turn of the year. This devaluation is causing massive price hikes for middle and lower class Iranians who have taken to streets of Tehran to protest which in some cases have sparked riots.

That being said, we have yet to see whether a rollback or pause in Iran’s nuclear program will follow. It seems, at least, that for now Israel is calming down a little and is shifting its focus from military action to economic oppression.

Economist and international relation scholars alike have long debated the effects of sanctions. While some find the use of sanctions overly crude and exceedingly slow to affect any significant behavioral change. Others argue that even the mere threat of sanctions can change an offending countries behavior – and that this effect is too often overlooked. While the last four years of sanctions (or the ones in place since 1979) have not discouraged Iran’s vigor in further pursuing the enrichment of nuclear fuel, additional American sanctions, along with an oil embargo by Europe and Japan, did further undercut the government by squeezing its most important source of revenue: oil sales.

Renowned scholar Joseph Nye argued in 2011 that even though sanctions only work in about a third of the cases (citing a study by the Peterson Institute) they remain a valuable tool by allowing governments to communicate their strong disapproval without resorting to military force. Nye sees sanctions as a limited but useful tool because of their “signaling” capabilities, relatively low costs, and the potential for smart, targeted sanctions to be applied flexibly.

Amir Taheri of the Al Arabiya News writes about the limited capabilities of sanctions, even if the sanctions were to break Iran’s economic back – as we might be witnessing at the moment – it would not necessarily change the behavior of Iran or their pursuit of nuclear power. Mr. Taheri believes that Iranian leaders are caught in a set of structures that will not allow them to back down and that they might think Iran can survive with a limited export of oil. He fears that this might push Israel and the US to make the choice between surrendering to the Islamic Republic or push even harder for regime change in Iran.

Others disagree on what constitutes a successful sanction. The sanctions in place now might prove that Iran is more isolated from the International Community than previously thought, and is facing growing opposition. However, Daniel Dresner thinks the uproar will cause the authoritarian regime to crack down even harder in the face of the economic crisis. If Iranian elites view the nuclear program as key to preventing any outside attempts at forcible regime change, it is extremely unlikely that they will compromise. Mr. Dresner, therefore, does not see the Iranian leadership returning to the negotiation table. The Iranian leadership is simply overly divided and Ayatollah Ali Khamenei is too ideologically rigid at the moment to make constructive bargaining happen.

The Obama-administration has steadfastly argued that sanctions have had an “enormous bite” and that we are watching the crippling and isolation of Tehran. As previously mentioned the US has had some form of sanction on Iran since 1979; These sanctions were partially successful in getting back hostages during the Iran hostage crisis, but have been less successful in limiting support for Hezbollah. The jury is still out on whether or not sanctions will deter Iran from obtaining nuclear weapons, but we might be seeing the first signs of progress with reported bilateral talks under way.


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