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Numerous governments and multinational entities impose sanctions against Iran. Following the Iranian Revolution of 1979, the United States imposed sanctions against Iran and expanded them in 1995 to include firms dealing with the Iranian regime. In 2006, the UN Security Council passed Resolution 1696 and imposed sanctions after Iran refused to suspend its enrichment program. U.S. sanctions initially targeted investments in oil, gas and petrochemicals, exports of refined petroleum products, and business dealings with the Iranian Republican Guard Corps. This encompasses banking and insurance transactions (including with the Central Bank of Iran), shipping, web-hosting services for commercial endeavors, and domain name registration services.
Over the years, sanctions have taken a serious toll on Iran's economy and people. Since 1979, the United States has led international efforts to use sanctions to influence Iran's policies, including Iran's uranium enrichment program, which Western governments fear is intended for developing the capability to produce nuclear weapons. Iran counters that its nuclear program is for civilian purposes, including generating electricity and medical purposes. Since nuclear talks between Iran and Western governments have largely failed, new proposals to enforce stronger economic sanctions on Iran are currently being discussed.
Europe's General Court overturned European sanctions against two of Iran's biggest banks (Bank Saderat & Bank Mellat), the two banks had filed suit with the European court to challenge those sanctions.
The European Union - which for years had condemned America's prospective "extraterritorial" application of national trade law and warned it would go to the WTO's Dispute Resolution Mechanism if Washington ever sanctioned European firms over Iran-related business. Russia, China and the other BRICS have also accommodated Washington’s increasing reliance on the threatened imposition of "secondary" sanctions against third-country entities doing business with Iran.
Removing sanctions against the banks would severely weaken Europe's sanctions regime. Other major players in Iran's economy, including the Central Bank of Iran and the National Iranian Oil Company, are now challenging their own sanctioned status.
The UN Security Council passed a number of resolutions imposing sanctions on Iran, following the report by the International Atomic Energy Agency Board of Governors regarding Iran's non-compliance with its safeguards agreement and the Board's finding that Iran's nuclear activities raised questions within the competency of the Security Council. Sanctions were first imposed when Iran rejected the Security Council's demand that Iran suspend all enrichment-related and reprocessing activities. Sanctions will be lifted when Iran meets those demands and fulfills the requirements of the IAEA Board of Governors.
The European Union has imposed restrictions on cooperation with Iran in foreign trade, financial services, energy sectors and technologies, and banned the provision of insurance and reinsurance by insurers in member states to Iran and Iranian-owned companies. On 23 January 2012, the EU agreed to an oil embargo on Iran, effective from July, and to freeze the assets of Iran's central bank. The next month, Iran symbolically pre-empted the embargo by ceasing sales to Britain and France (both countries had already almost eliminated their reliance on Iranian oil, and Europe as a whole had nearly halved its Iranian imports), though some Iranian politicians called for an immediate sales halt to all EU states, so as to hurt countries like Greece, Spain and Italy who were yet to find alternative sources.
On 17 March 2012, all Iranian banks identified as institutions in breach of EU sanctions were disconnected from the SWIFT, the world's hub of electronic financial transactions.
One side effect of the sanctions is that the global shipping insurers based in London are unable to provide cover for items as far afield as Japanese shipments of Iranian liquefied petroleum gas to South Korea.
In 2009, incoming head of the IAEA, Yukiya Amano, said there was no evidence in official IAEA documents that indicated that Iran was seeking to develop nuclear weapons, and in 2013, Seyed Hossein Mousavian, former spokesman for Iran's nuclear negotiators, said that "there is no diversion of Iran's nuclear program toward weaponization", adding that, supported by over 4000 man-days of inspections, "there is no conclusive evidence that Iran has made any effort to build a nuclear bomb since 2003; and that the Iranian leadership has not yet made a political decision to build an actual weapon".
In fact, the U.S. director of national intelligence, James Clapper, testified in March 2011 that he has a high level of confidence that Iran has not even made such a decision.  but also says that intelligence agencies "do not know whether it currently intends to develop nuclear weapons."  Hans Blix, former head of the International Atomic Energy Agency, currently head of Blix and Associates said, "So far Iran has not violated NPT and there is no evidence right now that suggests that Iran is producing nuclear weapons." He also stated "a majority of Iranians would think the enrichment part of Iran's nuclear programme is not essential." In November 2011 the IAEA reported "serious concerns regarding possible military dimensions to Iran's nuclear programme" and indications that "some activities may still be ongoing." In February 2013 an EU court struck down – for the second time – the legality of some of Europe’s sanctions on the biggest Iranian bank.
The sanctions bring difficulties to Iran's $483 billion, oil-dominated economy. Data published by the Iranian Central Bank show a declining trend in the share of Iranian exports from oil-products (2006/2007: 84.9%, 2007/2008: 86.5%, 2008/2009: 85.5%, 2009/2010: 79.8%, 2010/2011 (first three quarters): 78.9%). The sanctions have had a substantial adverse effect on the Iranian nuclear program by making it harder to acquire specialized materials and equipment needed for the program. The social and economic effects of sanctions have also been severe, with even those who doubt their efficacy, such as John Bolton, describing the EU sanctions, in particular, as "tough, even brutal." Iranian foreign minister Ali Akhbar Salehi conceded that the sanctions are having an impact. China has become Iran's largest remaining trading partner.
Sanctions have reduced Iran's access to products needed for the oil and energy sectors, have prompted many oil companies to withdraw from Iran, and have also caused a decline in oil production due to reduced access to technologies needed to improve their efficiency. According to Undersecretary of State William Burns, Iran may be annually losing as much as $60 billion in energy investment. Many international companies have also been reluctant to do business with Iran for fear of losing access to larger Western markets. As well as restricting export markets, the sanctions have reduced Iran's oil income by increasing the costs of repatriating revenues in complicated ways that sidestep the sanctions; Iranian analysts estimate the budget deficit for the 2011/2012 fiscal year, which in Iran ends in late March, at between $30bn to $50bn. The effects of U.S. sanctions include expensive basic goods for Iranian citizens, and an aging and increasingly unsafe civil aircraft fleet. According to the Arms Control Association, the international arms embargo against Iran is slowly reducing Iran's military capabilities, largely due to its dependence on Russian and Chinese military assistance. The only substitute is to find compensatory measures requiring more time and money, and which are less effective. According to at least one analyst (Fareed Zakaria), the market for imports in Iran is dominated by state enterprises and regime-friendly enterprises, because the way to get around the sanctions is smuggling, and smuggling requires strong connections with the regime. This has weakened Iranian civil society and strengthened the state.
The value of the Iranian rial has plunged since autumn 2011, it is reported to have devalued up to 80%, falling 10% immediately after the imposition of the EU oil embargo since early October 2012, causing widespread panic among the Iranian public. In January 2012, the country raised the interest rate on bank deposits by up to 6 percentage points in order to curtail the rial's depreciation. The rate increase was a setback for Ahmadinejad, who had been using below-inflation rates to provide cheap loans to the poor, though naturally Iranian bankers were delighted by the increase. Not long after, and just a few days after Iran's economic minister declared that "there was no economic justification" for devaluing the currency because Iran's foreign exchange reserves were "not only good, but the extra oil revenues are unprecedented," the country announced its intention to devalue by about 8.5 percent against the U.S. dollar, set a new exchange rate and vowed to reduce the black market's influence (booming, of course, because of the lack of confidence in the rial). The Iranian Central Bank desperately tried to keep the value of the rial afloat in the midst of the late 2012 decline by pumping petrodollars into the system to allow the rial to compete against the US dollar. Efforts to control inflation rates were set forth by the government through a three-tiered-multiple-exchange-rate; this effect has failed to prevent the rise in cost of basic goods, simultaneously adding to the public's reliance on the Iranian black-market exchange rate network. Government officials attempted to stifle the black-market by offering rates 2% below the alleged black-market rates, but demand seems to be outweighing their efforts.
Sanctions tightened further when major supertanker companies said they would stop loading Iranian cargo. Prior attempts to reduce Iran's oil income failed because many vessels are often managed by companies outside the United States and the EU; however, EU actions in January extended the ban to ship insurance. This insurance ban will affect 95 percent of the tanker fleet because their insurance falls under rules governed by European law. "It's the insurance that's completed the ban on trading with Iran," commented one veteran ship broker. This completion of the trading ban left Iran struggling to find a buyer for nearly a quarter of its annual oil exports. Iran has sought to manage the impact of international sanctions and limit capital outflows by promoting a "resistance economy," replacing imports with domestic goods and banning luxury imports such as computers and mobile phones. This is predicted to lead to an increase in smuggling, as "people will find a way to smuggle in what the Iranian consumer wants." To sustain oil imports, Iran has also provided domestic insurance for tankers shipping Iranian oil. Iran had hoped to sell more to Chinese and Indian refiners, though such attempts seem unlikely to succeed, particularly since China—the single-largest buyer of Iranian crude—has been curtailing its oil imports from Iran down to half their former level.
Another effect of the sanctions, in the form of Iran's retaliatory threat to close the Strait of Hormuz, has led to Iraqi plans to open export routes for its crude via Syria, though Iraq's deputy prime minister for energy affairs doubted Iran would ever attempt a closure.
After Iranian banks blacklisted by the EU were disconnected from the SWIFT banking network, Israeli Finance Minister Yuval Steinitz stated that Iran would now find it more difficult to export oil and import products. According to Steinitz, Iran would be forced to accept only cash or gold, which is impossible when dealing with billions of dollars. Steinitz told the Israeli cabinet that Iran's economy might collapse as a result.
The effects of the sanctions are usually denied in the Iranian press. Iran has also taken measures to circumvent sanctions, notably by using front countries or companies and by using barter trade. At other times the Iranian government has advocated a "resistance economy" in response to sanctions, such as using more oil internally as export markets dry up and import substitution industrialization of Iran.
In October 2012, Iran began struggling to halt a decline in oil exports which could plummet further due to Western sanctions, and the International Energy Agency estimated that Iranian exports fell to a record of 860,000 bpd in September 2012 from 2.2 million bpd at the end of 2011. The results of this fall led to a drop in revenues and clashes on the streets of Tehran when the local currency, the rial, collapsed. The output in September 2012 was Iran's lowest since 1988.
Iranian Foreign Ministry spokesman Ramin Mehmanparast has said that the sanctions were not just aimed at Iran's nuclear program and would continue even if the nuclear dispute was resolved.
In the face of increased economic pressure from the United States and Europe and a marked decrease of oil exports, Iran is seeking to build a resistance economy as well as ongoing gold imports from Turkey.
94 Iranian Parliamentarians signed a formal request to have Ahmadinejad appear before the "Majles" (parliament) to answer questions about the currency crisis. The Supreme Leader, terminated the parliaments request in order to unify the government in the face of international pressure. Nonetheless, Ahmadinejad has been called to questioning by parliament on a number of occasions, to justify his position on issues concerning domestic politics. His ideologies seem to have alienated a large portion of the parliament, and stand in contrast to the standpoint of the Supreme Leader.[dubious ].
A recent report by Dr. Kenneth Katzman, for the Congressional Research Service, listed the following factors as major examples of economic mismanagement on the part of the Iranian government:
"• The EU oil embargo and the restrictions on transactions with Iran’s Central Bank have dramatically reduced Iran’s oil sales – a fact acknowledged by Oil Minister Rostam Qasemi to the Majles on January 7, 2013. He indicated sales had fallen 40% from the average of 2.5 million barrels per day (mbd) in 2011 (see chart above on Iran oil buyers). This is close to the estimates of energy analysts, which put Iran’s sales at the end of 2012 in a range of 1 mbd to 1.5 mbd. Reducing Iran’s sales further might depend on whether U.S. officials are able to persuade China, in particular, to further cut buys from Iran—and to sustain those cuts.
• Iran has been storing some unsold oil on tankers in the Persian Gulf, and it is building new storage tanks on shore. Iran has stored excess oil (21 million barrels, according to Citigroup Global Markets) to try to keep production levels up—shutting down wells risks harming them and it is costly and time consuming to resume production at a well that has been shut. However, since July 2012, Iran reportedly has been forced to shut down some wells, and overall oil production has fallen to about 2.6 million barrels per day from the level of nearly 4.0 mbd at the end of 2011.
• The oil sales losses Iran is experiencing are likely to produce over $50 billion in hard currency revenue losses in a one-year period at current oil prices. The IMF estimated Iran’s hard currency reserves to be $106 billion as of the end of 2011, and some economists say that figure may have fallen to about $80 billion as of November 2012. Analysts at one outside group, the Foundation for the Defense of Democracies, believe Iran’s hard currency reserves might be exhausted entirely by July 2014 at current rates of depletion. Compounding the loss of oil sales by volume is that many of its oil transactions reportedly are now conducted on a barter basis—or in exchange for gold, which is hard currency but harder to use than cash. And, the February 6, 2013, imposition of sanctions on Iran’s ability to repatriate hard currency could cause the depletion rate to increase.
• To try to stretch its hard currency reserve, on October 15, 2012, Iran said it would not supply hard currency for purchases of luxury goods such as cars or cellphones (the last 2 of the government’s 10 categories of imports, ranked by their importance). The government is still supplying hard currency for essential and other key imports. Importers for essential goods can obtain dollars at the official rate of 12,260 to the dollar, and importers of other key categories of goods can obtain dollars at a new rate of 28,500 to the dollar. The regime has also threatened to arrest the unofficial currency traders who sell dollars at less than the rate of about 28,500 to the dollar. The few unofficial traders that remain active are said to be trading at approximately that rate so as not to risk arrest.
• Some Iranians and outside economists worry that hyperinflation might result. The Iranian Central Bank estimated on January 9, 2013 that the inflation rate is about 27%—the highest rate ever acknowledged by the Bank—but many economists believe the actual rate is between 50% and 70%. This has caused Iranian merchants to withhold goods or shut down entirely because they are unable to set accurate prices. Almost all Iranian factories depend on imports and the currency collapse has made it difficult for Iranian manufacturing to operate.
• Beyond the issue of the cost of imported goods, the Treasury Department’s designations of affiliates and ships belong to Islamic Republic of Iran Shipping Lines (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have further raised the prices of goods to Iranian import-export dealers. Some ships have been impounded by various countries for nonpayment of debts due on them.
• Suggesting Iran’s operating budget is already struggling; some reports say the government has fallen behind in its payments to military personnel and other government workers. Others say the government has begun "means testing" in order to reduce social spending payments to some of the less needy families. In late 2012, it also postponed phase two of an effort to wean the population off subsidies, in exchange for cash payments of about $40 per month to 60 million Iranians. Phase one of that program began in December 2010 after several years of debate and delay, and was praised for rationalizing gasoline prices.[clarification needed] Gasoline prices now run on a tiered system in which a small increment is available at the subsidized price of about $1.60 per gallon, but amounts above that threshold are available only at a price of about $2.60 per gallon, close to the world price. Before the subsidy phase out, gasoline was sold for about 40 cents per gallon.
• Press reports indicate that sanctions have caused Iran’s production of automobiles to fall by about 40% from 2011 levels. Iran produces cars for the domestic market, such as the Khodro, based on licenses from European auto makers such as Renault and Peugeot. The currency collapse has largely overtaken the findings of an IMF forecast, released in October 2012, which Iran would return to economic growth in 2013, after a small decline in 2012. An Economist Intelligence Unit assessment published in late 2012 indicates Iran’s Gross Domestic Product (GDP) likely contracted about 3% in 2012 and will contract an additional 1.2% in 2013. ("Oil Sanctions on Iran: Cracking Under Pressure.")
According to the U.S., Iran could reduce the world price of crude petroleum by 10%, saving the United States annually $76 billion (at the proximate 2008 world oil price of $100/bbl). Opening Iran’s market place to foreign investment could also be a boon to competitive U.S. multinational firms operating in a variety of manufacturing and service sectors.
On the other side, according to a US bipartisan study, oil prices "could double" if Iran is permitted to obtain a nuclear weapon. U.S. gross domestic product could fall by about 0.6% in the first year—costing the economy some $90 billion—and by up to 2.5% (or $360 billion) by the third year. This is enough, at current growth rates, to send the country into recession.
Pharmaceuticals and medical equipments do not fall under international sanctions but the country is facing shortages of drugs for the treatment of 30 illnesses including cancer, heart and breathing problems, thalassemia and multiple sclerosis (MS) because Iran is not allowed to use the international payment systems. A teenage boy died from hemophilia due to a shortage of medicine caused by the sanctions on Iran. Delivery of some agricultural products to Iran have also been affected for the same set of reasons.
In 2013, The Guardian reported that some 85,000 cancer patients require chemotherapy and radiotherapy which are now scarce. Iranians with serious illnesses have been put at imminent risk by the unintended consequences of international sanctions, which have led to dire shortages of life-saving medicines such as chemotherapy drugs for cancer and bloodclotting agents for haemophiliacs. Western governments have built waivers into the sanctions regime to ensure that essential medicines get through, but those waivers are not functioning, as they conflict with blanket restrictions on banking, as well as bans on "dual-use" chemicals which might have a military application. In addition, there are 40,000 haemophiliacs who can't get anti-clotting medicines. Operations on haemophiliacs have been virtually suspended because of the risks created by the shortages. An estimated 23,000 Iranians with HIV/AIDS have had their access to the drugs they need to keep them alive severely restricted. The society representing the 8,000 Iranians suffering from thalassaemia, an inherited blood disorder, has said its members are beginning to die because of a lack of an essential drug, deferoxamine, used to control the iron content in the blood. To make matters worse, Iran can no longer buy medical equipment such as autoclaves (sterilising machines), essential for the production of many drugs because some of the biggest western pharmaceutical companies refuse to have anything to do with Iran.
In recent reports, the development of a medicinal black market has come to the forefront of international news, a desperate population resorting to any means to obtain, at times life saving, medications. Though vital medicines are not affected by sanctions directly, the amount of hard currency being made available to the Minister of Health is what's causing a huge backlash on the amount of vital medicines being made available to the public. Iran's first female Minister Marziyeh Vahid Dastjerdi (since the Iranian Revolution) was dismissed in December for speaking out against the lack of support from the government in times of economic hardship. Furthermore, Iranian patients are at risk of amplified side effects and reduced effectiveness because Iran is forced to import more medicines, and chemical building blocks for other medicines, from India and China, thereby replacing the higher quality products from Western manufacturers. Imports from American and European drug makers were down by an estimated 30 percent in 2012 and falling. Given the nature of patents in the world of pharmaceuticals, substitutions for advanced medicines is often unattainable, particularly when it comes to diseases such as cancer and multiple sclerosis.
In recent years, billions of dollars of Iranian assets abroad have been seized or frozen, including a building in New York City, and bank accounts in Great Britain, Luxembourg, Japan and Canada.
The "Civil Movement" was initiated by two prominent Iranian economists, Dr. Mousa Ghaninejad -economist at Tehran's Petrolium University of Technology- and Dr. Mohammad Mehdi Behkish -economist at Tehran's Allameh Tabatabaei University- on 14 July 2013.
The two economists described sanctions as an "Unfair" and "Illogical" tool for political targets when free trade is concerned and Iranian people can ask the people around the world to replace the illogical tools with logical discussions. A more free economy will lead to less political enmity and the free trade carries amicable relationships between countries. In fact politics should be at the service of peace and economic growth. They also have emphasized that free market economy has proved to bring higher rate and growth and thus welfare for the people. Now enforcing sanctions to any country would in fact punish not only the people of the sanctioned country but also the people of trade partners of that country.
This movement was supported by large group of intellectuals, academics, civil-society activists, human right activists and artists around the world about which numerous reports appeared in the media.