Sanctions and Regime Policies Cause Growing Crisis in Iran

New Study Exposes Deterioration of Economic and Social Rights

(April 29, 2013) The international community should target sanctions more effectively to impose costs on the Iranian government and not its citizens, and the Iranian government should end its policies that worsen the crisis in access to medicines, foods, and other essential imports, the International Campaign for Human Rights in Iran said today.

According to a new study the Campaign released today, international sanctions and Iranian government policies are combining to bring about a severe deterioration in the ability of many Iranians  to pursue their economic and social rights to healthcare, employment, and adequate nutrition.

The study, A Growing Crisis: The Impact of Sanctions and Regime Policies on Iranians’ Economic and Social Rights, draws on a review of scholarly material and journalistic accounts, as well as extensive interviews with a cross-section of Iranians, and details the costs borne by the Iranian people.

“Sanctions must not end up destroying Iran’s social and economic infrastructure. Collective punishment undermines civil society and benefits no one,” said Hadi Ghaemi, executive director of the Campaign.

Prior to 2012, dysfunctional economic policies undertaken by successive Iranian governments since the Islamic Republic’s inception in 1979 far outweighed the impact of any sanctions in terms of economic costs to the country. This changed with the implementation of comprehensive multilateral sanctions in 2012, which targeted all sectors of the Iranian economy and took direct aim at Iran’s principle source of revenue, its oil sector.

When combined with the economic policies of the Iranian government—particularly those enacted under the administration of Ahmadinejad, which exacerbated inflation and unemployment and left the import- and oil-dependent Iranian economy deeply vulnerable—the sanctions severely amplified the economic costs to the Iranian population. Continued regime mismanagement has only worsened these costs; for example, the Iranian government’s under-allocation of resources for the import of critical items such as medicines has produced a crisis for many Iranians.

Sanctions and regime policies have thus combined to debilitating effect. Financial, shipping and insurance prohibitions have made the movement of any goods into or out of the country prohibitively expensive, and banking sanctions have cut off payment channels for transactions. As a result, it has become difficult to maintain essential imports, including foods, medicines, and other humanitarian items that are explicitly exempt from sanctions, as well as the inputs and raw materials that Iran’s industries depend upon.

A Growing Crisis: The Impact of Sanctions and Regime Policies on Iranians’ Economic and Social Rights. Download the study here.

Meanwhile, with Iran’s oil revenues halved, it is difficult for the government to support its currency and slow the decline in the value of the rial. As a result, inflation has risen by many estimates to at least 50 percent, and higher in certain sectors. The standard of living of all wage earners has plummeted and an increasing number of unemployed workers and their families are being pushed into poverty and malnutrition.

As the study shows, Iran’s industries have been hit hard. For example, sanctions have reduced access to and significantly raised the cost of the hard currency that the country’s manufacturing sector requires for the purchase of inputs, while transaction costs have risen significantly. Since 2012, the number of bankruptcies, layoffs, and plant closures has substantially increased and workers’ wages are often paid irregularly. Iran’s 15 million workers and their dependents face an increasing struggle to meet the rising costs of rent and food, and the growing ranks of the unemployed now face dispossession and hunger.

The crisis in the country’s healthcare system has become particularly acute, according to the study. Iran depends on imports for its stock of medical equipment, for the raw materials its pharmaceutical industry uses to manufacture medicines, and for advanced drugs used to treat life-threatening diseases. Yet due to the banking sanctions and Iran’s expulsion from SWIFT, there are no channels to make payments to Western suppliers.

The Iranian government has greatly exacerbated the situation by not allocating the requisite hard currency to the medical sector. As a result there are severe shortfalls in medicines and equipment. The most vital drugs for cancer and other severe diseases are now increasingly unavailable, and rampant inflation arising from the shortages has made what is available increasingly out of reach for most Iranians.

Significant increases in the rate of poverty engender other negative repercussions, especially for women and children. These include the withdrawal of children from schools and the promotion of child labor, with the brunt of these practices being borne by young girls. Women are more likely to lose their jobs, and economic and social dislocations may well lead to increased domestic violence.

“The Iranian people are not responsible for the government’s policies regarding its nuclear program. They should not bear its costs,” Ghaemi said.

The International Campaign for Human Rights in Iran calls on all parties to reassess their policies in light of the economic harm being inflicted upon the Iranian people. Most urgently, all measures should be taken immediately to expedite the export of critically needed medicine and other humanitarian goods to Iran.