Contrary to what most people think, Sanctions are not having the desired impact. In fact, we are in fact killing the U.S. – not Iran. They are plain stupid. And the outcome of very stupid policy makers. They are very naive. Very naive. Consider these twelve reasons, why:
1) Sanctions provide the Regime (the mullahs) with a credible, continuous and convenient enemy to sustain their regime. Anytime, anyone complains about the economy (and corruption), they say, it’s not us, it’s the Great Satan: America. Sanctions deflect blame. Sanctions in effect protect the regime from criticism. At the same time, in the name of national security, it provides a pretext for hard measures, and oppression (every opponent can be conveniently labeled as a spy). Sanctions have reinforced hard-liners and slowed down the pace of reforms – and eliminated reformers from any position within the government.
2) Sanctions have forced Iranians to become self-sufficient. Unable to purchase goods from the West, Iranians have found ways to make most things that they imported in – themselves. Cars in Iran were once assembled from components imported from abroad. Iran, today, makes every component in the cars it produces. And by the way, has set up manufacturing plants for its cars in other countries: Azerbaijan, Belarus, Senegal, Egypt, Venezuela, and Syria! It has become the largest car manufacturer in the region making millions of cars on the same scale as Ford or GM and exporting to ‘their’ markets in the Persian Gulf, Iraq, etc. You can tell this same story in industry after industry – when it comes to Iran. And sanctions have enabled this. Take virtually any sector of Iran’s economy, it has flourished in the absence of foreign competition because of sanctions, and the result has been an impressive level of self-sufficiency. US has diminished its own market in Iran, and then handed distinct separate markets to Iran for its exports where the US doesn’t compete. It has enabled the development of yet another global competitor. Sanctions have created a parallel economic reality, without the presence of US companies.
3) Sanctions have accelerated (and enabled) the use of alternate financial vehicles for global trade (aware from the US dollar). Once again, we’ve tried to shut down Iran’s economy and hurt ourselves. Iran has found means to develop its own insurance products outside of US or UK insurance and re-insurance markets. Having found a ‘work-around’, in the long-run, they could become serious competitors to Lloyds of London for example. Not only do they now trade in non-US denominated currencies, but Iran now is developing Crypto-currencies at a very fast pace. Having developed ways to trade outside Western banking systems, they are teaching other sanctioned nations (and partners), and developing more sophisticated mechanisms to effect trade. In the end, this will mean a reduction of use of the US dollar in global trade, and with this, a reduction in assets deposited in US banks. Everything in the US economy depends on a core principle: the use of the US dollar as a fiat currency for global trade. US could not survive if foreign depositors took their cash out of US banks. As we encourage others to find ways around the use of the U.S. dollar, we are in turn shooting ourselves in the foot.
4) Sanctions have reduced the flow of Iranian students abroad. This is very stupid for the U.S. First, this has led to a significant growth in higher education systems in Iran. Iran has become completely self-sufficient in higher education. Iran now has roughly 4 million adults in higher education contrast this to 14 million in the US (that is 4 times larger population), or 2.5 million in the UK (with roughly a similar population to Iran). Iran therefore has one of the largest university systems in the world, with branches by the way, in Lebanon, Syria, Iraq, UAE etc. It is not only developing its own students but exporting this – as a service industry! Iran now has more foreign students in its university system, than there are Iranians studying in foreign universities. US and European colleges no longer have income from Iranian students. Iranians are no longer assimilating with the West – which in turn will affect their sentiments and connectivity with the West. If there is a long-term goal of improving relations with Iran, this is certainly not one way to do it. If there is a goal of tanking Iran’s economy or toppling the regime, then surely is ridiculous considering they are producing more educated professionals per capita than the US, or UK, particularly in STEM, and at the same time setting up shop outside Iran in the region. This will haunt the U.S. in the long-run.
5) Sanctions have reduced the flow of Iranian professionals abroad. Right after the revolution something like 5 million Iranians fled abroad. The net outcome of this was a massive economic impact on the U.S. with Iranian entrepreneurs and intrapreneurs having a Trillion-dollar scale positive impact on the U.S. economy. It is no coincidence that wherever Iranians settled in the U.S. has in turn become a hub of tremendous economic growth. Iranian immigrants have been significant – by any measure. Take any high growth enterprise: eBay, Google, Uber … ALL in some significant way been impacted by Iranian immigrants. Yet, with sanctions, the flow has diminished. And this will have a long-term impact on the U.S. economy. Immigrants are the key to US entrepreneurship. Sanctions, in turn, will have killed entrepreneurship in the U.S. (which by the way has dropped dramatically). US has historically thrived by stealing intellectual talent. Now with sanctions, US can’t steal shit.
6) Sanctions have forced Iran into trading with US competitors. Its not as simple as Iran doing business with China or Russia. Sanctions mean that there are no patent filings in Iran of any Western inventions – for example. So, in effect, people can ‘copy’ US technology and sell those products to Iran with impunity. Iran, therefore, has become a bootlegging center. Iran is not only trading, but also more importantly empowering and enabling the development of technology for US competitors. So, when patents run out, the competitors already have manufacturing and technology in place to jump in right away. Sanctions are enabling US competitors. Which, incidentally, not only include companies with Iran’s business partners i.e.China, but even within Iran, Iranian companies can copy US made drugs for example, sell them and then export them abroad when patents run out at very low prices – and completely undermine US companies with generic products very early. There is one more corollary. Increased trade with countries like China, inevitably mean that the two countries become politically closer aligned. It completely undermines US relations with the same countries. It unites our enemies.
7) Sanctions have meant that Iran developed its own Military-Industrial complex. Although this would appear relatively meaningless; in fact, this is a double whammy for Iran. First, it has meant that Iran has not wasted countless dollars on buying overpriced military goods from the West – like Saudi Arabia, and at the same time helped Iran develop its own advanced Industrial base that can also be applied for non-military applications. A third benefit has been a rise in arms exports and yet another source of non-oil income. While Iran remains far behind the west in terms of its military technology, it continues to advance rapidly – at relatively low cost. Limited budgets have truly meant that Iran has had to look very carefully at where and how it spends its military budget. This in turn, has made Iran very potent and effective. Iran spends less on defense than the cost of one (yes, one) US aircraft carrier – yet it has a viable missile and space program, a viable drone program, a viable armaments program, a viable tank and heavy duty vehicle program, builds its own ships, submarines, etc. Although routinely denigrated in the Western press, by any standards, it is way ahead of its peers and now a formidable military opponent.
8) Sanctions on Oil have boosted Iran non-oil economy. In effect, Iran is transitioning away from Oil, at a time when Oil itself is becoming less and less valuable. With the growth of renewables, Iran is well poised to sustain its economy via other sectors. Sanctions have done Iran a great favor – forced it to become less dependent on fossil fuel exports. In turn, Iran’s non-oil exports have risen dramatically to over $50 Billion dollars (more than its oil exports).
9) Because of sanctions, Iran has virtually no foreign debt. While US will struggle to pay off its $25 Trillion dollar debt load, Iran, by contrast has roughly $8 Billion dollars in foreign denominated debt. This is against a non-oil export base of over $50 Billion dollars. i.e. peanuts. Iran has less sovereign debt than Jamaica. Less per capita than Namibia! Just think about it. Iranians basically have no debt. Without debt, they can’t go bankrupt. But the US can?! A child born in the Ireland is born with over $500,000 in debt – the minute it comes out of its mother’s womb. By contrast, Iranians are super-rich – with no debt. Sanctions have enriched Iran.
10) It completely immunizes Iran from a failing US economy. Sanctions have forced Iran to identify markets outside of the US sphere of influence. And they have done so successfully. Remember, Iran is a nation of roughly 80 million population. It only needs to find a few external markets and it can feed itself. When you have broad brush sanctions this means ‘porous’ sanctions. All Iran needs to do is find holes – like North Korea, Venezuela or other nations that are being sanctioned and trade. And then there are large countries like China, India and Russia who are also very happy to trade with Iran (with much greater growth rates than the US). Sanctions have created a non-US dollar denominated trading environment. And thus, completely immunized Iran from any impact of a failing US economy. Remember in 2008, US allies suffered most – countries like Iceland, UK… i.e. the whole western world – while Iran was relatively immune from the debacle. US can not be proud of its economic future when it is taking on a Trillion dollars a month in debt; and China for the last 3 months has had a larger GDP than the U.S.
11) Sanctions protects Iranian companies. Yes, again Iranian companies benefit from sanctions. They don’t need to compete with imported goods. They have a monopoly. They are well positioned to raise prices, given that foreign competitors were forced to steer clear of Iran because of American sanctions that restricted commerce with the country. Interestingly, 70% of Iran’s economy is in the hands of the religious elite (their foundations, and the guard corps). So, in effect sanctions reinforce the regime and their companies.
12) Iran was the best performing Stock Market Last year. Yes, sanctions do weaken Iran’s currency. Which for Iranian exporters, a weak currency was good news. They pay in local (Rials/Tomans) to pay their workers and buy materials but earn dollars on their export sales. Their profits have skyrocketed and so have stock prices. Iran’s market was the best performing exchange in the world last year.
There is an adage: keep your friend close and your enemies closer. The true meaning of this adage is to keep ’em close, as silent reminders, so you can look at yourself in the mirror and say, “Today, I am strong.”. Sanctions on Iran is a sign of US weakness and impotence. US has no other means to push back, so like a silly child we take our ball and run out of the sand pit. The net outcome is, we’ve handed that whole sand pit to Iran; and along with their friends China, Russia etc. they are systematically toppling our economic dominance and expanding the sand pit.
Its time for a complete re-think of these failed policies. Distancing ourselves from Iran, has in fact hurt the U.S. more. And, don’t forget, Iranians (ordinary Iranian who we are hurting with these policies) are STILL the most pro-American people in the Region. US has screwed up, and doesn’t have the decency to admit it.
Trump is a moron, surrounded by other morons like Pompeo and let’s not forget idiots like John Bolton who was as strong advocate for Sanction. And, let’s not forget disbanded the US pandemic management team in the national security office and threw out the manual on how to manage pandemics – it was John Bolton! And let’s also not forget that Trump is also influenced by idiot allies like Saudi Arabia … who are also proponents of Sanctions. These are the same people that just tanked the world oil markets, bankrupting the US oil industry and eliminating 10 Million American jobs… and I keep wondering who was behind 9/11?? Why are we listening to them?