Report: Unwinding the Sanctions Web

February 25, 2013

            Iran is more likely to adapt to tightened sanctions than to adjust its nuclear policy, according to a new report by the International Crisis Group. A key problem is that the West and Iran view sanctions differently. European and U.S. officials assume that economic hardships will eventually cause Iran to compromise on its nuclear program. But Tehran’s “resist and survive” mentality considers capitulation to be a dangerous option, according to the report.
The world’s six powers could offer Iran sanctions relief at talks in Kazakhstan on February 26. Yet sanctions are so extensive and intricately woven that it would be “hard to offer significant, concrete relief short of a major —and improbable—turnaround” in Tehran’s domestic and foreign policies. The report argues that a time-limited suspension or waiver would be unlikely to provide much relief, as international trading and consumption patterns have shifted away from Iran. The following are excerpts from the report’s executive summary, followed by a link to the full text at the end.

            With war a frightening prospect and fruitful negotiations a still-distant dream, sanctions have become the West’s instrument of choice vis-à-vis Iran. They are everywhere: in the financial arena, barring habitual commercial relations; in the oil sector, choking off Tehran’s principal source of currency; in the insurance sector, thwarting its ability to transport goods. Without doubt, they are crippling Iran’s economy. But are they succeeding? By at least one important criterion (the intensity of Western concern over nuclear progress), plainly they are not. Add to this myriad unintended consequences (bolstering the regime’s ability to allocate goods; harming ordinary citizens; pushing leaders persuaded the goal is regime change to escalate its own retaliatory steps; and constructing a web of punitive measures harder to unknot than to weave). Sanctions are not necessarily counterproductive. But, too easily they become a path of least resistance, a tool whose effectiveness is assessed by the harm inflicted, not how much closer it brings the goal…
            Not the product of a single policy, the sanctions regime has mutated over three decades, been imposed by a variety of actors and aimed at a wide range of objectives. The end result is an impressive set of unilateral and multilateral punitive steps targeting virtually every important sector of Iran’s economy, in principle tethered to multiple policy objectives (non-proliferation; anti-terrorism; human rights) yet, in the main, aimed at confronting the Islamic Republic with a straightforward choice: either comply with international demands on the nuclear file, or suffer the harsh economic consequences…
            Ultimately, sanctions as a tool of coercive diplomacy are only as effective as the prospect of relieving them in exchange for policy shifts is real; the measure of efficacy lies in what can be obtained when they are removed, not what happens when they are imposed. Therein lies another problem. For in the Iranian case, the situation at best is murky in this regard. Although long reluctant to acknowledge the impact of sanctions or project any eagerness to see them lifted, Iranian officials increasingly identify such a step as a condition for any accord. Yet that is far easier said than done. Sanctions have become so extensive and so intricately woven that it will be hard to offer significant, concrete relief short of a major – and improbable – turnaround in major aspects of the Islamic Republic’s domestic and foreign policies; reaching the threshold for removing U.S. sanctions in particular is hard to imagine. That leaves the option of a time-limited suspension or waiver, which in turn is likely to prompt at best time-limited and reversible Iranian reciprocal steps.
            Too, the impact of sanctions in many cases has acquired a life of its own, one that will outlast the measures themselves. This is because important trading and consumption patterns already have changed. Companies and countries that have shifted away from Iran – often at considerable expense – are unlikely to rush back, at least short of solid assurances that any decision to remove the penalties will be lasting rather than temporary.
            Finally, there is another, considerable risk: that by placing all one’s eggs in the sanctions basket, failure may appear to leave no other option but war...

Click here for the full report.