Are These Economic Sanctions Going to Backfire?

The New York Times this morning published an article describing new sanctions the E.U. has put in place on Iran, specifically related to trade in metals, finance, and natural gas. The sanctions are such that it is nearly impossible these days for Europeans to do business in any way with Iranians, effectively severing financial ties between the two entities. Surely, this will be another staggering blow dealt to the already floundering Iranian economy. Perhaps the amount of trade the European Union does with Iran is miniscule in comparison with the United States and other leading global powers; however, I applaud the E.U. for their most recent round of trade sanctions on Iran given their current dismal economic situation. That does not mean I approve of them, though.

The Western powers find themselves in a difficult situation when it comes to Iran these days, for several reasons. The never-ending train wreck that is Syria has added increased instability to what is normally a highly unstable region of the world – the United States and Europe must tread very carefully. Iran’s continued support of Assad has maybe drawn more ire from the Western world, but the overall relationship is so negative that this added irritation wouldn’t affect things much. When it comes to Iran itself, the nuclear debate continues to rage on, with neither side making much of an impact on the other. Personally, I do not believe Iran is as close to developing nuclear arms as many Republicans have asserted lately, but I do concede that it would be foolish to let Iran continue to do as they please. While Iran may be some ways away still from the 80% uranium enrichment they’ll need for nuclear weapons, my colleague Vicky has pointed out that as the process moves along, enrichment increases exponentially.

The potential solutions to this conundrum seem scarce, if not non-existent. Military action is absolutely out of the question – if we have abstained from such intervention in war-torn Syria for 18 months, we cannot justify invading a country that comparatively is highly stable. Even clandestine operations are extremely risky. Should the C.I.A. or any similar organization be caught in Iran, the repercussions from China and Russia would be painfully draconian. The situation is not yet dire enough to warrant such a risk.

Economic sanctions seem to be the last viable option. And so far, it seems that they have been extremely effective. Last month, Iran’s currency, the rial, lost 40% of its value against the dollar. Oil production is the lowest it has been since 1988, down dramatically from last year. And with the E.U.’s latest sanctions, things will only get worse for Iran.

Here’s the thing: the Iranian leadership doesn’t care. Ayatollah Ali Khamenei continues to shrug off the sanctions to the media, and President Ahmadinejad seems only marginally more concerned. It is Iran’s middle class that is bearing the brunt of these sanctions, as jobs decrease, prices increase, and the currency continues to be undervalued. The sanctions are working because the U.S. and Europe wanted to put the Iranian government in the position of having to bail out their middle class from total economic chaos, but the problem is that so far the government seems to have spurned these people in lieu of their beloved nuclear program. Take about the all-time backfire.

Maybe the threshold has simply not yet been reached, and Iran will eventually throw in the towel and back off the nuclear program in order to save their middle class. I hope that is the case. But if they don’t, the U.S. will have an even bigger, and more immediate problem to deal with than nuclear weapons – an Iranian middle class that despises us even more than they used to, and the perfect economic environment for radicalism to thrive in. We need to ask ourselves: at what cost will we foster yet another country for al Qaeda and its affiliates to burrow in and strengthen? This is not to say al Qaeda and its affiliates are not already in Iran. But without a serious re-evaluation of the sanctions we are imposing, we may see their presence explode in the future. My fear is that that explosion will be just as bad as a nuclear bomb’s.