x Abu Dhabi, UAEThursday 20 July 2017

Trade sanctions aren't reducing Tehran's resolve

The US keeps tightening its sanctions against Iran. But these measures are not having their intended effect.

Ever since the Iranian Revolution of 1979, the US has been trying to control Iranian government policies by squeezing the country's economy. Under each president since - Jimmy Carter, Ronald Reagan, George W Bush, Bill Clinton, George W Bush and now Barack Obama - sanctions have been widened and deepened. The EU, the UN and many other countries, urged on by Washington, have also put limits on their Iran trade.

But Iran is not the only victim. Sanctions reduce trade, and trade is a two-way street: other countries, starting with the UAE, suffer serious collateral damage. Bilateral trade shrank by 54 per cent between 2011 and 2012, the Dubai Chamber of Commerce and Industry says.

The latest turn of the screw came on Monday, when the US closed a loophole that had allowed Iran to export oil and accept payment in gold. Now bullion dealers trading with Iran risk being frozen out of the much more important US market.

Other new measures will further suppress Iran's maritime trade. Medicines and food are exempted, but major shipping firms will simply stop bothering with Iran; two big Chinese lines have already said they will do just that. This may open new opportunities for small traders from Dubai, but financing restrictions make any commercial ties a challenge.

Despite talk about "smart sanctions" the US has been unfortunately heavy-handed, imposing policies which in practice hurt many of Iran's 75 million people without weakening the government's resolve to push ahead with its nuclear programme. If Washington planners hope to generate a popular revolt, they badly misunderstand the Iranian public.

The timing of these new sanctions is particularly unfortunate; if Iran's president-elect Hassan Rouhani has any inclination towards more openness to the rest of the world, yet more sanctions may well stifle it.

After so many years, it must be said that the current sanctions have not accomplished their aims. The US has named three policies sanctions are supposed to discourage: Iran's support for terrorism, its undermining of Middle East peace and its efforts to develop nuclear weapons.

But today Iran gives important support to Bashar Al Assad, Hizbollah and Hamas, and appears to be drawing steadily closer to its goal of having nuclear bombs.

The problem is that sanctions, though too blunt a tool, are the world's only non-military lever against Tehran's intransigence. The terms and details of existing and future controls on Iran's commerce demand careful attention in planning and implementation.