Iran Sanctions: Who Really Wins?

The case for sanctions as an effective foreign policy tool is strongest when the country in question is brimming with internal political tensions caused by years of stagnation or decline in living standards, which sanctions can intensify to bring about the desired policy shift by the country's rulers.  This is not the situation in Iran.

The sizeable majority of Iran's economically disadvantaged population that supports the Ahmadinejad government is not poor in the sense of lacking food and shelter.  Its support for the current government signifies a clear choice between a populist leader with oil money to distribute and his liberal opponents, who criticize his redistributive policies for being inflationary and dismiss them as mere charity.  In this political atmosphere sanctions are likely to cement the authoritarian pact between the conservatives and the economic underclass and at the same time weaken the voices calling for greater social, political and economic freedom. Heavy sanctions are likely to strengthen the hands of the Iranian leaders who have opposed the liberal economic reforms of the Rafsanjani and Khatami era and favor a return to the controlled economyof the 1980s, when the government rather than markets decided on the allocation of foreign exchange, credit, and even basic necessities.  The sanctions on gasoline imports under review may be a godsend for President Ahmadinejad, who would use the sanctions as an excuse to raise gasoline prices to the middle class and use the proceeds to expand his popular base.

Against this backdrop, engagement, as originally espoused by President Obama, may have a better chance of diffusing the crisis.  First, if Iran is as close to nuclear capability as it is claimed, it should have a strong interest in non-proliferation.  Making it difficult for a newcomer to join the nuclear club would enhance the value of its own potential membership and dissuade rivals from taking a similar path.  If a major goal of sanctions against Iran is to dissuade other countries from taking the path to nuclear capability that Iran has taken, the possibility to make that case with "Iran as a partner" should be kept in mind if the strategy of "Iran as a victim" falls apart.  Second, the US and its allies should emphasize positive inducements, and expect to learn during the negotiations what those are rather than decide in advance. US help for Iran to join the World Trade Organization (WTO), which has been offered before and which would benefit some sections of Iranian society while not others, is not a priority for the Ahmadinejad government. Third, it would help the engagement process if the US acknowledged that Iran has something to offer the region in terms of lessons for economic development and building infrastructure - roads, electricity, education and health.  This would have the added benefit of shifting the focus from Iran's military role in the region to economic development, which is the long term road to regional stability that both countries seek.