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How Tehran Is Surviving U.S. Sanctions

(Foreign Affairs) Henry Rome - A year ago, the U.S. kicked off a "maximum pressure" campaign against Iran. After withdrawing from the Iran nuclear deal in May 2018, in November it reimposed a raft of economic sanctions squeezing Iranian oil exports and curtailing the country's access to the international financial system. Iran expected that other parties to the nuclear deal would help shore up its economy. But European governments could not force private companies to defy U.S. sanctions. Nor did other friendly governments - China, Russia, and India - pick up the slack. They face little pressure from the oil market to go out on a limb for Iran. Global demand is slowing, supply is abundant, and prices are low - so why risk U.S. sanctions to buy Iranian oil? The International Monetary Fund and World Bank predict that Iran's economy will rebound from a recession to near zero percent growth in 2020. Iran's fluctuating currency, the rial, has stabilized. The Iranian economy stays afloat in part because it is diversified. In 2017, crude oil accounted for 43% of Iranian exports, so Iran's service, agricultural, and non-oil industrial sectors were able to cushion the blow from the collapse of oil revenues under sanctions. Moreover, the government can draw upon its $100 billion of reserves to cover any gaps and to ensure the continued strong social spending that Iranians expect. The writer is an analyst at Eurasia Group.
2019-11-06 00:00:00
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