Iran Sanctions Have Cost the U.S. $175 Billion

 

The devastating impact of sanctions on Iran’s economy is well known—from lost revenue in the oil, petrochemical and medical industries to the extreme hardship ordinary Iranians face on a daily basis. But now a new report published by the National Iranian American Council (NIAC) looks at what sanctions mean for Americans.

“In these economic times, one simply cannot ignore $175 billion in lost export revenue or 200,000 lost jobs in one year,” says Trita Parsi, president of the NIAC and one of the-authors of the report, Losing Billions—The Cost of Iran Sanctions to the U.S. Economy

While American and Iranian negotiators are still hammering out a deal that would resolve important technical concerns on both sides, any eventual accord would rescue Iran’s parlous economy and, as the NIAC study shows, reap considerable rewards for Americans as well.

IranWire spoke to Trita Parsi about how reduced sanctions and a boost in trade relations between Iran and the U.S. could help build healthier economies, as well as improving Iran’s image on the international stage—particularly when it comes to civil society.

 

Losing Billions documents how the U.S. has lost out financially because of the sanctions, and that thousands of jobs have been lost over the last 18 years. What industries are most directly affected?

It’s not jobs that have been lost, but rather lost job opportunities. These job opportunities, due to forsaken export revenues, were likely in the areas of agriculture, telecommunications, aviation, and oil and gas to name a few.

How did you calculate these losses? Can you tell our audience a little about the models you used and your methods of gathering this information?

These calculations were done through an econometric gravity model, which was developed about 20 years ago by economists at the International Institute for Economics. It’s a widely used model to trace and assess trade patterns. The data we used came from the IMF. The methodology is explained in detail in the report.

Do you think most Americans are aware of the economic costs and implications of reaching a nuclear accord with Iran? If the American public had a better sense of that, do you think it would shift attitudes more in favor of diplomacy?

Judging from the reactions to the report, these numbers completely took people—including folks in the US government—by surprise. To the best of our knowledge, no such study had been done prior to this.

Who has benefited over the past three decades from the enormity and potential of the Iranian market? Has Europe been far better positioned to reap the financial gain of doing business with Iran?

The model does not identify who captured that trade, but up until 2010, clearly Asian countries increased their presence in the Iranian market. Since 2010, however, even they have paid a price for the sanctions, even though they have increased other aspects of their involvement in the Iranian market. China, for instance, buys far less oil from Iran compared to 2010, but has increased its sales of other goods.

Contrary to many people’s expectations, the E.U. is paying a very high price for the sanctions—twice as much as the U.S. for the years 2010-2012.

 

If sanctions were lifted, a likely response from both inside and out the U.S. would be that the international community will be left with very little leverage when dealing with Iran on a range of issues, from the nuclear program to human rights. What other types of leverage would the international community have?

On the contrary, the West has very little leverage precisely because there is so little interaction. If the U.S. had not eliminated its trade with Iran in 1995 and if in 2009 there actually was a significant American presence in Iran, do you think the Iranian government would have had a harder or easier time to cheat in the elections? Would the US have had more or less leverage? Part of the reason the US had so little leverage in 2009 is because it had nothing in Iran. No embassy, no diplomats, no companies—no Americans. That’s no guarantee that it would have used its leverage constructively, but it is very difficult to argue that America’s complete absence from Iran has given it more leverage.

This year a French business delegation travelled to Tehran to assess future business opportunities with Iran. The U.S. government also gave temporary approval for Boeing to do business with Iran, though with very tight restrictions. Do you know of representatives from U.S. businesses that have engaged with Iranian counterparts? What hopes are there on the horizon for business to open up between the two countries?

U.S. companies are understandably very careful because as things stand right now, no sanctions have been lifted. And if there is a deal, U.S. sanctions are going to be lifted slowly. The situation for E.U. companies is different.

Do you think that doing business with Iran would make it possible for the international community to have a bigger influence on the human rights situation in Iran? If the US entered the Iranian telecommunications market, for example, would the Iranian government be in a position to use internet filters to the degree they do at the moment?

In most other places, if pressure from the international community has existed for political liberalization (both from civil society and governments), trade has tended to help move things in the right direction on human rights. The track record is not perfect, but that is also partly because trade hasn’t always come with such demands. I believe it must. So it is important that civil society organizations make such demands.

And if trade comes with such demands, it will be much more difficult for the Iranian government to resist change. There is after all a reason why Iranian hardliners prefer to keep Iran isolated and closed.

Moreover, you also have to assess alternatives. Has the absence of U.S.-Iran trade or diplomatic contacts in the past decades done anything to improve Iran’s human rights record? How does one impact people one doesn’t talk or interact with? Has isolation of Cuba or North Korea helped improve human rights there? The answer is clearly no. But again, it’s important to understand that trade will not automatically lead to political liberalization—it must be combined with clear expectations.

Have the sanctions that have already been eased already been significant or mainly symbolic?

It’s been more symbolic than significant, but expectations for greater sanctions relief have grown significantly. 

 

Read the full report here