The Impact of Sanctions on Iran By Vinayak Ganeshan and Matt Nguyen Research Staff

Iran’s Government Civilian Government Elected Branches Executive Branch President Mahmoud Ahmadinejad Confrontational Foreign Policy Deferential to Guardian Council Accusations of election tampering Promised to build up Iran’s military capacity to rival Western nations Theocratic Government Guardian Council Grand Ayatollah Khamenei Personal Army: Iranian Revolutionary Guardian Corps Ordered Harsh Crackdowns against Arab Spring Protestors

Iran’s Nuclear Ambitions Began in the 1950s with the US supporting Iran’s Atoms for Peace Program prior to the overthrow of the Shah In the last decade, clear evidence existed that Iran was buying technology for centrifuges from Russia In 2011, it was reported that Iran had developed enough uranium at 20% enrichment to start the process of creating a nuclear weapon Iran has several nuclear facilities across the country (Qom, Natanz, Fordow, Arak, etc.) Many of these facilities have not been inspected by the IAEA Violation of the Nuclear Non-Proliferation Treaty

But Why Does It Matter? An Iran with a nuclear weapon could create a nuclear arms race in the Middle East and the rest of the world Israel, Pakistan, and India are already neighboring powers with nuclear weapons It would also heighten tensions between US-supported Israel and its Arab neighbors: Ahmadinejad denies the Holocaust and has publically called for the destruction of Israel Iran is a strong supporter of the current Syrian regime led by Bashir Al-Assad

Diplomatic Efforts After the removal of Khatami, Iran has been dominated by hardliners unwilling to negotiate or reform Iran has toed the line in many talks with the West, but ultimately has never come to an agreement (the talks are seen as method to waste time and continue nuclear production) IAEA requests have been largely ignored Security Council threats have also received little response U.S. missile defense systems in Turkey and Israel

Solution: International Sanctions “suck it”

Types of Sanctions Banking Industry – Financial Transactions Basic Consumer Goods Petroleum – Oil Exports Weapons Raw Materials for Manufacturing Technology

IMPACT On average, imports 24% more costly Inflation, value of the Rial fallen 40% against the Dollar (32,000 rials to 1 dollar) Partially due to misuse of expansionary fiscal and monetary policy meant to counter the international sanctions Oil exports down 40%, Iran’s primary export Prior increases in price of crude oil had given Iran $28 billion in addition revenue that had helped them mitigate the impact of international sanctions Iran in Recession High Unemployment Shrinking Economy Political Unrest as a result of bad economy Arab Spring Movement

Criticism of Sanctions Hurt Iranian civilians more than the Iranian Regime Ineffective: Republicans and Israeli Prime Minister Seen as a weak exercise of Western power compared to military action “4 years closer to an atomic bomb” Satisfies the international community while Iran continues their clandestine nuclear weapon development