Managing the Disruptive Aftermath of Somalia’s Worst Terror Attack
by International Crisis Group The devastating twin truck bombings in Somalia’s...
Published on October 7th, 2010 | by Ali Gharib0
Coville: Sanctions ‘weakening’ civil soc., ‘reinforcing’ regime
The former-Tehran correspondent of the New York Times (and current Nieman Fellow at Harvard) Nazila Fathi has a post up at her new blog pointing to an article on the World Policy Institute blog by Thierry Coville of the Institut de Relations Internationales et Stratégiques in Paris.
Coville argues that, as the value of the Iranian Rial depreciates against the dollar, many parts of the private sector are unable to do business because the black market for U.S. dollars is drying up. That happened because the U.S.-led sanctions regime against Iran severed the relationships between many Iranian banks and their foreign counterparts.
However, Coville writes (with my emphasis):
[O]ne should not leap to the conclusion that the sanctions are working. The Iranian government has sufficient foreign exchange reserves (due to the oil windfall from 2005 to 2008) and as long as the oil price does not crash (oil exports represent 80 percent of foreign exchange earnings), the Iranian economy will survive. Iranians have in the past showed great talent at finding alternative financial solutions when the usual mechanisms do not work. UAE still plays a central role in Iranian foreign trade, but there has also been a reorientation of Iranian commerce with Asia—China and South Korea being now the second and fourth biggest exporters to Iran. Sanctions on the energy sector may have an impact on the long term, but are unlikely to change Iranian government behavior on the nuclear issue immediately.
The most troublesome aspect of these sanctions, however, is that they are weakening Iranian civil society and reinforcing the networks close to the regime. The Iranian private sector, with no privileged access to the Iranian banking system, is suffering most acutely from the financial sanctions. It is the Iranian worker or member of the “educated” middle-class which will suffer from a higher inflation rate, if the rial depreciation goes on. The companies close to the Pasdarans and the Foundations have enough political backing to get access to the financing they need to survive in this difficult economic environment (they are controlling most of the illegal import networks which generate huge profits).
In fact, these sanctions, by limiting the economic exchanges between Iran and the outside world are constraining the reinforcement of Iranian civil society. This policy of isolating Iran is then in complete contradiction with the positive comments made by the American and European governments about the “mature and democracy-loving” Iranian civil society during the protests of 2009.