Daily Management Review

US Sanctions Talking Toll On Iranian Economy


US Sanctions Talking Toll On Iranian Economy
Sanctions on Iran by the United States are currently in full swing and have been targeted at the oil, energy, banking, metals and shipping sectors of the country. Ever since the sanctions were first implemented last year after the US president Donald Trump withdrew from the landmark 2015 nuclear agreement which had allowed some international sanctions to be lifted from Tehran. The deal was aimed to stop Iran from gaining access to materials to manufacture nuclear weapon.
Additional sanctions on iron, steel, aluminum and copper sectors of Iran were implemented by the US after Iran declared in May this year that it would not be complying with parts of the nuclear deal. The latest US sanctions also prevented Iran from exporting crude oil to China and Syria.
Tensions between the two countries escalated in June this year after a US spy drone was shot down by Iran near the Strait of Hormuz. More sanctions were also implemented by the Trump administration.
Despite the exit of the US< the other major world powers including Russia, France, China, Germany and Britain — who were signatories to the deal, had chosen remain with the agreement and have also kept the sanction waivers on Iran intact.
However, it has become very difficult for the international community to do business with Iran because of the very severe clamp down on the banking and financial institutions of the country by the US sanctions.
The US has said that the reasons for it imposing sanctions on Iran include its aim of restricting the military power of Iran as well as to prevent Iran from lending support to Houthi rebels in Yemen, Hezbollah in Lebanon and a number of groups in the Middle East that the US considers to be militant group.
Speculations of a the possibility of a presidential summit between the US and Iran were fueled a last week’s Group of 7 summit in France with Trump saying that it was possible to hold talks with Iran.  However, according to the Iranian President Hassan Rouhani, there would be no use of talks with the US unless sanctions against Tehran were lifted buy Washington.
Iran had been forced to reduce military spending by 29 per cent this year and Tehran had been unable to acquire nuclear weapons because of the US sanctions, the U.S. special envoy for Iran, Brian Hook, had told reporters in June this year.
Ever since the US sanctions were put into place, there has been a 80 per cent fall in the oil export of Iran which is the country’s primary source of income. There could be a shrinkage of 6 per cent this year in Iran’s economy, says a prediction by the International Monetary Fund.
However, according to various experts and Iranian officials, a shrinkage would not mean that Iran’s economy would be routed. 
“Iran has learned how to mitigate the damages that are associated with sanctions,” said Steve Hanke, an economics professor at Johns Hopkins University. “Yes, it costs something, but they retain stability.”