3 Reasons Sanctions Are Having No Effect on Iran

“The regime does not believe it can win a war against the United States,” says Trita Parsi, but “it does believe it can survive it. It does not believe, however, that it can survive capitulation on the nuclear issue.”

Dr. Parsi, president of the National Iranian American Council, argues that the regime in Iran is more worried about domestic support than the threat of war with the U.S. Ironically, U.S. economic sanctions against Iran, which are supposed to undermine this support and persuade the regime to give up its nuclear program, seem to be failing to achieve this objective.

One possible reason for this has to do with Iran’s internal politics: The core supporters of the regime are not only the most powerful in Iran, they are also the only ones with a strategy for dealing with the West. In the absence of a homegrown Iranian alternative to the regime’s strategy, sanctions will likely fail to stop Iran’s march towards nuclear capabilities.

The regime’s three-part strategy for dealing with sanctions could be summarized as follows:

1. Economic Reforms

Iran has been dealing with sanctions since the Islamic regime first took power in 1979.  It has become fairly adept at finding ways around them through money laundering, bartering arrangements, and back-alley business deals. 

In addition to using loopholes, Iran has embarked on building an “economy of resistance” which is absorbing the economic impacts of sanctions. It has found other sources of government revenue to make up for the decline in oil exports, including value-added taxes, privatization of government assets, and increased capacity to turn crude oil into gasoline which can be used at home.

The escalation of sanctions in 2012 has created perhaps the worst economic environment that Iran has ever faced. While sanctions are crippling the economy, businesses in Iran aren’t pressuring the government to change its nuclear posture. Instead, they are looking for ways to get economic favors from the regime.

2. Target Western and Israeli Interests Abroad

Iran’s use of proxies such as Hezbollah and Hamas to attack U.S. and Israeli interests abroad is nothing new. However, there has been an increase in Iranian-sponsored attacks in the last three years. The attempted assassination of the Saudi ambassador to the United States sent a signal to Washington that Iran is capable of launching operations on the United States' home turf. The volume of cyber-attacks from Iran has also increased.

3. Escalate Nuclear Weapons Development 

By some estimations, Iran has already produced enough enriched uranium to make a nuclear weapon. Rather than slowing down, Iran has accelerated its enrichment activity.

This seems counter-intuitive: Iran deals with sanctions on its nuclear program by moving forward with its nuclear program. But it is exactly the American plan in reverse. By escalating sanctions, the United States pressures Iran to come to the negotiating table and simultaneously gives itself more bargaining chips. On the other side of the table, Iran escalates its nuclear program for the same reason. It’s better for Iran to come to the table with more enriched uranium before it starts negotiating for reductions to its stock. 

This strategy has worked surprisingly well for North Korea, which repeats the pattern of escalating tensions in order to extract concessions and aid from the United States and its allies.

It’s clear that whatever Washington is doing is not working. Sanctions are not undermining the regime.  Instead, they are confirming the regime’s claim that the West is out to get Iran. Iranians blame the United States, not the regime, for the hardships imposed by sanctions. More needs to be done to convince the regime, and the Iranian people, that there is a plausible way out of sanctions.