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Protests in Iran over the last few months have been about human rights and corruption and freedom. But the most recent protest was sparked by economic hardship - hardship caused in part by U.S. sanctions. Mary Childs from our Planet Money podcast reports that to some degree, that is by design.
MARY CHILDS, BYLINE: The U.S. has had sanctions on Iran for basically the past 47 years. Sanctions can be restrictions on trade or on how money can move in and out of a country. They are meant to be an alternative to war, to violence - basically constricting the economy as a way to pressure a government to change. And the effects in Iran's economy we're seeing today are due to corruption and sanctions that trace back to 2010 and the Obama administration's efforts to curb Iran's nuclear ambitions.
Instead of sanctioning Iran alone, this time the U.S. got other countries to join in by asking them to reduce how much oil they imported from Iran over time. And if the countries refused to join in on these oil sanctions, the U.S. would sanction them - their banks. So the countries complied. And the U.S. figured out how to cut off specifically Iran's financial system. U.S. officials peer-pressured international banks to stop doing business there or risk getting cut off from dollar-based financial systems, which underpin most of global trade. These novel techniques were effective, according to researcher Esfandyar Batmanghelidj, whose think tank focuses on Iran and West Asia. Iran's economy started to turn.
ESFANDYAR BATMANGHELIDJ: For ordinary people, this was a blow. They were experiencing increased inflation. Their currency had devalued in a way that was wiping out their purchasing power. The country was struggling to do basic banking with the international community.
CHILDS: Eventually, Iran came to the negotiating table and agreed to what we in the U.S. call the Iran nuclear deal in 2015. The U.S. would roll back sanctions, provide economic relief and Iran would stop its nuclear program. But undoing the sanctions was harder than expected. Big banks really didn't go back in. And then, just over a year after the Iran nuclear deal, it got torn up after Donald Trump was inaugurated. He reimposed the sanctions and over the years has added more.
And there's a flaw with sanctions in Iran and in general. Sanctions can benefit some people in the sanctioned country. In the Islamic Republic, there's a sort of parallel military called the Islamic Revolutionary Guard Corps, which is also kind of a company. Economists say it has benefited from the lack of international competition due to sanctions. Like instead of Exxon or Boeing getting some domestic business, the IRGC gets it. By some estimates, they now control around 50% of Iran's economy. And finally, turns out sanctions are not all that bloodless.
EVALEILA PESARAN: They are a form of warfare, and they just sound more palatable.
CHILDS: That's political economist Evaleila Pesaran at the University of Cambridge. She wrote a book about Iran's economy after the 1979 revolution. She says the actual mechanism by which sanctions pressure a government is widespread misery. At first, it's just inflation. Things start costing more. And then it becomes hard to get what you need.
PESARAN: In theory, sanctions aren't supposed to affect people's ability to access medical supplies, but then they do. So then it becomes harder to get your medicine. So if you've got diabetes, maybe you don't get your insulin. That is then a way in which we can see that sanctions are not nonviolent.
CHILDS: Research published last year in The Lancet Global Health Journal found that over the past decade, U.S. and EU sanctions have caused more than half a million deaths per year.
PESARAN: The regime has lots of very powerful tools at its disposal to shut down the internet and to shoot people and to put many more people in prison. And I don't know. If it can do all of that, it can hold on to power in some form.
CHILDS: Mary Childs, NPR News.
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