How do economic sanctions affect one of the most significant economies in the Middle East? In this case study, we will examine the effects of the economic sanctions imposed on Iran by the United States, Europe, and the United Nations. The goal is to provide insights into how economic sanctions impact a country’s economy, society, and political stability.

Background Information

Iran is a dominant country in the Middle East, with a population of 83 million. It is the second-largest economy in the region after Saudi Arabia, with a GDP of about $463 billion. Iran is the world’s fourth-largest oil producer and possesses the second-largest natural gas reserves globally. However, the country has experienced a challenging economic environment in the past several years due to economic sanctions.

Iran has been under economic sanctions since 1979 when the US broke diplomatic relations with Iran after the Islamic Revolution. Since then, the United States and its European allies have imposed several rounds of sanctions for Iran’s nuclear program, human rights violations, and support for terrorism.

Effects of Economic Sanctions on Iran

Economic Effects

The primary intention of economic sanctions is to restrict a country’s ability to trade with the international community. These sanctions have had a devastating impact on Iran’s economy, leading to a substantial reduction in revenue.

📉 GDP Reduction and Inflation: Iran’s GDP reduced by about 7% between 2017 and 2018 due to the sanctions. The inflation rate also skyrocketed, reaching over 50% in 2019.

🧑‍🌾 Agriculture and Food Production: Agricultural production in Iran has reduced by 30% due to a lack of access to technologies and inputs in the farming sector. As a result, the country has become more reliant on food imports, making food expensive.

💰 Foreign Exchange and Banking: The sanctions have made it nearly impossible for Iran to trade with foreign countries. Financial institutions and banks cut ties with Iranian banks, making it challenging to transfer funds and execute transactions. This situation has led to a shortage of foreign exchange and a significant decline in trade and investment.

A graph showing the decline in Iran's GDP over the years

Social Effects

Sanctions have significant social effects, with the most vulnerable groups bearing the brunt of the economic woes.

👩‍👧‍👦 Women and Children: Women and children in Iran are the most affected by the sanctions. The sanctions have resulted in job losses, making it difficult for families to provide for their children. Sanction-related inflation has also led to the unaffordability of essential commodities such as medicine.

🧑‍💼 Unemployment: The sanctions have led to significant job losses, with Iran’s unemployment rate estimated at 10.9% in 2019. The job losses have particularly affected the youth population, who constitute about 60% of the total population.

🏥 Healthcare: Iran’s healthcare system, which was once one of the best in the region, has suffered due to the sanctions. The lack of access to medicine, medical equipment, and technology has led to a shortage of medication, major health crises, and decreased life expectancy.

A picture showing children in Iran suffering from the economic sanctions

Political Effects

Sanctions impact a country’s political stability and foreign affairs.

🤝 Foreign Affairs: The sanctions have resulted in increased tensions between Iran and the international community, particularly with the US. Iran has become more isolated and, as a result, has strengthened its ties with Russia and China, who are not subject to the same sanctions.

🩸 Nationalism: Sanctions have increased nationalism and anti-western sentiments in Iran, with the government and people blaming the west for their economic troubles. This situation has led to a more significant distrust of the west and the international community.

🤔 Government Response: The Iranian government has responded to the sanctions by imposing its norms and values. The government has increased domestic production, developed national industries, and encouraged more investments in the private sector.

A political cartoon illustrating Iran's isolation from the rest of the world due to the economic sanctions

Conclusion

In conclusion, economic sanctions have a severe impact on Iran’s economy, society, and political stability. The effects of sanctions have resulted in job losses, inflation, shortages of essential commodities, and decreased life expectancy. The government and the people of Iran blame the international community for their economic woes, leading to increased nationalism and anti-western sentiments. Therefore, it is vital to consider the wide-ranging consequences of economic sanctions before imposing them on any country.

An image showing the devastating effects of economic sanctions on Iran's population.