Will Sanctions Work in Iran?

Christopher Nolan Says He's Interested to Direct a James Bond MovieObviously history suggests that sanctions are ineffective when they are directed against a reasonably powerful state which is determined to stay the course. However it is actually becoming a question as to whether or not the Iranian regime may at some point decide to negotiate in good faith. The decision rests almost completely with the Grand Ayatollah Ali Khamanei and thus far he has shown no willingness to yield. The Revolutionary Guards would be the next most influential entity in Iran and on the surface it would seem highly unlikely that they would be willing to compromise.

However the fundamental truth is that the Revolutionary Guards and Ali Khamanei are most concerned with safeguarding their own power. The Revolutionary Guards are in control of huge sectors of the Iranian economy and the sanctions have had a real and growing impact on that economy. Is it going to be sufficient to convince them to negotiate away their Nuclear programme? It is not likely, but at least there is some chance now. This is because the Ayatollahs and the Revolutionary Guards are having to make some really gutwrenching economic decisions because of the sanctions. It is being estimated that the sanctions will reduce oil exports by 40% and that is money that the regime can not replace. They have to make cuts and in turn these cuts will undermine their support. Much of that support comes from the rural populations and the lower classes which are more likely to be religious.

The Iranians are clearly willing to make sacrifices. It is likely that they will find ways to get some of their oil onto the market, but that is going to be extremely inefficient and less profitable. They are tightening their belt by eliminating government subsidies on Natural gas and gasoline. The sanctions are just beginning to really bite, but it is a real question as to whether or not Ali Khamanei will ever relent. The only chance is if the sanctions begin to threaten the continued dominance of the ruling classes.