x Abu Dhabi, UAETuesday 16 January 2018

Forget sanctions, tempt Iran with a better deal

When have economic sanctions ever had a beneficial outcome?

When have economic sanctions ever had a beneficial outcome? I cannot think of one single example in history where the government-directed cessation of normal commercial activity between two countries has, on its own, produced the result desired by either the sanctioner, or (to coin a phrase) the sanctionee. Unilateral trade embargoes are either abandoned after much suffering and loss of material value on both sides, or lead to military conflict, which of course increases the suffering.

From recent and contemporary history there is the egregious example of Iraq. Decades of UN and US-sponsored sanctions made no difference to the regime of Saddam Hussein, which callously passed on the suffering to its people while engaging in covert sanctions-busting itself to ensure a steady flow of luxuries for its cronies. In the end, of course, regime change in Iraq was brought about by war, not sanctions.

Libya is occasionally held as an example of a regime that was "persuaded" back into the international fold by the weight of sanctions after the Lockerbie bombing. But this is a misreading: Libya was actually terrified by the US's global "shoot to kill" policy after the September 11 attacks and chose reconciliation with the West, rather than being classed as a sponsor of terrorism and therefore liable to invasion, like Afghanistan.

You can add North Korea, Zimbabwe, Cuba, Burma and others to the long list of contemporary "problem countries" where sanctions has made not a jot of difference to internal or external policy. In history, the examples simply ram home the point that economic sanctions either fail to achieve the desired result, lead to war, or both. French and British "sanctions" against Germany after the First World War, in the form of huge reparations, did nothing to stop the rise of the Nazis. It even encouraged them.

Japan went to war against the US mainly because it felt it had to overcome the American embargo on oil imports that was choking its industrial development. In 1941, US sanctions led directly to Pearl Harbor. We are just celebrating the end of what could be called the longest sanctions campaign in history. Twenty years ago the West resumed normal commercial relations with Russia and eastern Europe after an economic embargo put in place in 1945.

But the people who bravely tore down the Berlin Wall acted mainly because they wanted the economic benefits they could see in the West, but which their own governments denied them. It was a bizarre historical anomaly: sanctions were successful in forcing change, but only because the sanctioners (the communists of the Soviet bloc) were using them against their own people: the impoverished, would-be consumer sanctionees of the communists states.

And it was not the kind of change the sanctioners expected or desired, leading as it did to their own demise. Last week in Dubai, the management consultancy Oliver Wyman held a one-day "think-in" on issues facing the Middle East. In conjunction with the opinion pollster Zogby International, they came up with some fascinating insights on attitudes among top business and financial leaders in the region.

The most eye-catching was this: the biggest threat to business stability in the Gulf is not instability in Iraq or the Arab-Israeli conflict, nor any threat by extremist movements. Some 31 per cent saw a clash with Iran as the biggest threat. Even more interesting was the follow-up: 56 per cent of respondents thought that if Iran were "opened" it would have a positive impact on the GCC region. The message is clear: business people throughout the region want to end the charade of US-sponsored sanctions against Iran and resume normal trading relations.

The Americans have had some kind of embargo in place against Iran since the overthrow of the Shah in 1979. Recently, with the row over Iranian nuclear policy, these have intensified to the point where US companies and citizens are forbidden by law from having any trading relationship with the Iranians. Other global trading partners are intimidated into following suit or meekly go along with US policy.

The "bazooka" of American policy - the Iran Refined Petroleum Sanctions Act - is awaiting implementation. It would further strangle Iranian economic life by imposing an embargo on the movement of petrol to the country. Despite being the fourth-largest oil producer, lack of refining capacity, largely the result of previous sanctions, means the Islamic republic still has to import fuel. In 20 years, sanctions and embargoes have not made any difference to Iranian policy home or abroad. The absence of such a huge economic power from normal commercial activity has been a dead weight on the Gulf region.

As business leaders recognise, it is time to explore other ways to change Iranian policy. History shows that resuming normal trading relations with them would be a start. @Email:fkane@thenational.ae