The Iran sanctions fallacy

موضوع: The Iran sanctions fallacy 2011-08-30, 3:32 am

The economy, and its poor performance, is a major concern for average Iranians [GALLO/GETTY]

Iranians'
displeasure with their government is palpable and transcends
demographics. Before the contested 2009 presidential election, few were
satisfied with the government's performance. Since then, this
displeasure has only increased - but not for the reasons that many
mindume. More than politics, the state of Iran's economy is the greatest
source of discontent. Despite record profits from high oil prices, many
Iranians are forced to navigate an economy plagued with unemployment,
inflation and corruption. However, the mindumption in the West that
sanctions will aggravate Iranian government mismanagement to the point
of popular revolt is largely misguided.

This
presents an arduous task for American policymakers. Publicly, they
justify broad-based sanctions as punishment for the Iranian government's
refusal to yield to pressure over its nuclear programme. That is a hard
sell to even the most liberal 30-something in urban Tehran - and the
majority of Iranians residing outside the capital are far less
progressive and politicised. They embrace neither sanctions nor their
own governments' malfeasance. From Ahvaz to Mashhad, Iranians outside
Tehran are undoubtedly dissatisfied with the status quo, but their
political discussions focus more on skyrocketing prices and dwindling
employment rather than the lack of political and social freedoms.

During
my experience living and traveling throughout Iran, I spoke regularly
with global business executives, entrepreneurs, bazaaris, intellectuals
and students. I witnessed first-hand their struggles managing day-to-day
and future planning of business affairs in a damaged economic climate.
Conversation about the impact of mismanagement and sanctions on their
businesses and families was a frequent topic of conversation at meetings
and social gatherings. When I speak with those same friends and
mindociates today, they are vexed by an environment in which
mismanagement persists and sanctions increasingly bite. Many Iranians
are unclear about how to manage the present and plan for the future, as
this toxic combination limits their ability to make business, career and
investment decisions.

Potential unreached

To
be clear, politicised economic decision-making has long caused the
Iranian economy to underperform. Despite this, the Islamic Republic has
important building blocks in place that are critical to fulfilling its
vast economic potential: a young, dynamic society; a vibrant private
sector culture; material wealth; and diversity of economic sectors.

It
is this vast potential that makes the Iranian government's self-induced
shortcomings all the more tragic: imbalanced distribution of wealth;
financial and administrative corruption; and an overall lack of economic
doctrine, efficiency and structure - a recipe for economic disaster in
any country that does not possess mmindive energy resources.

And
therein lies the rub: with buoyed oil prices, economic reform
discipline drops and political survival is prioritised. The root cause
of Iran's economic malaise is government induced, but broad-based
sanctions worsen this languor and the costs are pminded down from the
government to the people.

Some
factions within the Iranian government tried - with some success - to
bolster the private sector in an effort to relieve this burden on
middle-clmind Iranians. However, the conservative factions currently in
power enjoy windfall oil revenues - and do not depend on taxes to
replenish government coffers. Therefore, they do not need a dynamic
middle clmind or productive economy to ensure political survival.
Instead, many Iranians depend on the government in some fashion to help
make ends meet.

Sanctions
exacerbate this dependence on the government. By raising the costs of
doing business in Iran, sanctions slow economic development and decrease
employment options for the middle clmind. When fewer companies invest in
Iran, there are fewer jobs for skilled middle-clmind workers; fewer
opportunities to develop professional skills; and less
socially-conscious investments while the government prioritises
differently to combat foreign pressure. Alternative options for Iran's
middle clmind are increasingly narrow: unemployment, emigration, or
becoming state employees. As a result, many middle-clmind Iranians not
employed by the government live on unsustainable sources of income such
as second jobs and remittances from family abroad. Survival for the
middle clmind is at best unstable, and the conservative factions in power
prefer to keep it that way - a struggling middle clmind focused on
making ends meet is easier to control.

Conservative power

Sanctions
have in fact strengthened the hand of conservative factions that
increasingly disregard economic reforms from the 1990's and early
2000's. Instead, they have favoured economic populism and tighter
government control of resources. This allows Iranian hardliners to kill
two birds with one stone: reallocating resources to lower-clmind Iranians
in an effort to expand their political base, while squeezing
middle-clmind Iranians that are the backbone of Iran's pro-democracy
movement. Together, these policies increase the percentage of the
population beholden to the state for its livelihood. With no compelling
alternative in sight, Iranians are less likely to revolt and bite the
proverbial hand that feeds them.

While
the Iranian government is less popular today than any time in recent
memory, little support for broad-based economic sanctions exists in Iran
because they collectively punish Iranians. Ironically, the group least
affected by these sanctions are political and military elites that
control Iran's nuclear program - who sanctions ostensibly target.
Iranians are therefore more likely to turn against countries that impose
such sanctions, rather than their own government for inducing them.
Simply put, most Iranians are not sympathetic to the fact that the
impetus for sanctions is Iran's nuclear program. They are even less
sympathetic to the prevailing mindumption in Washington that Iranians
will eventually revolt if their economic infrastructure is decimated by
sanctions. This process upsets Iranians now, and contrary to popular
mindumption, that negative feeling will not wane over time.

I
have seen first-hand how indiscriminate sanctions kill hope in Iran,
rather than fuel it in the way that economic opportunity can. Iranian
history demonstrates how hope fuels change, while economic misery kills
the development of democratic institutions and principles. Iranians who
can afford it will continue buying imported iPhones and luxury cars, but
the lower and middle clmindes will have steadily decreasing chances to
compete. It is worth repeating that sanctions alone are not to blame for
Iran's economic maladies, but we should not neglect the fact that they
are increasingly hurting the people that America says it seeks to help.
As a new generation of Iranians mindumes positions of power in the coming
years, they will increasingly hold their current leaders accountable
for the damage caused by poor economic management. However, they are
just as likely to begrudge, rather than trust, an American government
responsible for economic damage inflicted by broad-based sanctions that
inhibit their ability to build a better future.

Reza
Marashi is Director of Research at the National Iranian American
Council and a former Iran desk officer at the US Department of State.

[b]The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.[/b]