Sanctions on Iran: Effects and the Future

By Weston Lofdahl

Last week I covered the recent protests that broke out in Tehran as a result of the crumbling value of Iran's currency, the rial. One of the factors that have caused the rial to drop in value has been the sanctions placed on Iran from the United States, the United Nations, and other nations around the world, but how large of an impact have these sanctions actually had on Iran? This article from BBC does an excellent job at showing how different aspects of the Iranian economy have been impacted as sanctions were put in place and shows how the Iranian economy reacted to certain events through its history. 

The first graph to the right is from the BBC article above. It shows a decrease in oil production in Iran since 2005. The dark vertical line marks the first round of UN sanctions placed on Iran. Each dotted line after that point is another round of UN sanctions. The second graph shows a similar decrease in GDP growth since the first round of UN sanctions, marked again by the dark vertical line. With oil production decreasing it is no surprise that GDP growth is also decreasing since oil exports make up about 60% of Iran's revenue. There is no doubt that the sanctions Iran is facing have had an impact on their economy. What must be asked now is if the international community will continue to create more sanctions or let the current sanctions play out more. 

Next Monday there will be a meeting of ministers from the European Union to discuss whether or not there will be stricter sanctions placed on Iran. Philip Hammond, the defense secretary in the British government, said that the sanctions should be tightened on Iran in an attempt to generate, "potentially regime-threatening disruption and dissent," that could threaten the current Iranian government. Hammond also noted that there has been talks between the UK and the US about launching a trade embargo that would stop any imports and exports coming through Iran's central bank. Hammond's statements show the very real possibility of much broader sanctions being imposed on Iran in the coming months. Critics of the sanctions say that the sanctions are already causing enough pain to the citizens and don't need to be extended.