The Domestic Impact of the Isolationist Western Policy Against Iran

Since the Iranian revolution in 1979, Iran has been subjected to varying degrees of economic sanctions and asset freezes. These began in 1979 when the US Embassy in Tehran was taken over by revolutionaries. The US placed an embargo on the Iranian oil trade and froze $12 billion of Iranian assets held outside Iran with the aim of securing the release of the Us hostages who were taken from the embassy. The Iranian economy has been shaped by these prolonged economic and financial sanctions, which are aimed at reducing Iran’s capacity and ability to produce and export oil and limiting the country’s access to foreign exchange earnings.

Since 1979, The United States, the United Nations, and the European Union have imposed multiple sanctions on Iran for various reasons, including when the U.S. designated Iran as a “state sponsor of terrorism” in October 1983 and when the International Atomic Energy Association (IAEA), the UN’s nuclear watchdog, found that Tehran was not compliant with its international obligations in 2005 –after indications of work on uranium enrichment renewed international concerns surrounding Iran’s nuclear program.

The EU’s commercial and financial sanctions on Iran range from embargoing the export of arms and goods which could be used in enrichment-related activities; the import of crude oil, natural gas, petrochemical and petroleum products; the selling or supplying of precious metals, materials and key equipment used in the energy sector to prohibiting the access of Iranian cargo flights to EU airports. It has also frozen the assets of the Central Bank of Iran and major Iranian commercial banks.

These international sanctions have taken a severe toll on the Iranian economy. Since 2012, Iran has suffered a sharp economic decline. Although partially due to economic mismanagement and low investment, the international sanctions were a salient cause of the country’s high inflation and the weakened currency, which saw the Rial drop at least 80 per cent against the US Dollar in 2012. In April 2015, the Iranian economy was estimated to be 15 to 20 per cent smaller than it would have been if international sanctions had not been amplified in 2012 and cost $160 billion in lost oil revenue. In addition, more than $100 billion of Iranian assets are held in restricted accounts outside the country. The Statistical Center of Iran (SCI) has recently reported a monthly inflation rate of 12.2%, which means Iranians are paying 50% more for the same products compared to Spring 2021. This rate is expected to reach 50% by April 2023, further affecting the lives of ordinary Iranians.

Although Iran’s universal healthcare coverage accounts for a significant portion of healthcare costs; the failure of the system, under serious financial stress caused by international sanctions, has had a damaging effect on millions of patients throughout Iran. These restrictions on financing, combined with the sharp devaluation of the Iranian currency, have created a significant burden on Iranian companies and hospitals purchasing essential medicines and medical equipment from outside Iran that residents depend upon for critical medical care. Human Rights Watch found that despite the humanitarian exemptions of the embargo, the current economic sanctions on Iran are causing unnecessary suffering to Iranian citizens who are suffering from medical conditions and diseases. The worst affected are Iranians with rare conditions that require specialised treatment and are unable to acquire previously available medicines or supplies –for instance, people with leukaemia, epidermolysis bullosa, epilepsy and chronic eye injuries from exposure to chemical weapons during the Iran-Iraq War. These “humanitarian exemptions” are not carried out in practice, particularly after US President Trump's decision in September 2019 to impose further sanctions on Iran’s Central Bank under “counterterrorism authority,” severely restricting the operations of any last remaining Iranian financial institutions that would be able to engage in foreign exchange transactions involving humanitarian imports.

Excessive caution is taken by banks and pharmaceutical companies wary of US sanctions regarding whether they are seen as violating these sanctions by exporting to or conducting financial transactions with Iran since they risk receiving secondary sanctions. This is a significant factor in limiting Iran’s access to funds for imports of medicines and medical equipment. In addition, companies that have obtained the requisite licences to import food and medicine into Iran face difficulties in finding third-country banks to process these transactions.

In 2022, there were further talks between the U.S. and Iran in an attempt to revive the Joint Comprehensive Plan of Action (JCPOA) or Iran Nuclear Deal. However, due to disagreements and the current protests following the arrest and death of Mahsa Amini and their violent suppression by the Iranian authorities, the US, the EU, the UK and Canada have all enacted human rights sanctions against Iran, making it very unlikely that the US and Iran will come to an agreement and international sanctions against Iran will be lifted in the near future.