Individualism under Siege: The Effect of U.S. Sanctions on Iran

By Matin Pedram (1)

Economic sanctions (either targeted sanctions or comprehensive embargos) undermine infrastructures as well as social synergy. Although someone can claim that targeted sanctions have no such negative externalities, decrease in foreign investment and interruption in capital flows are the definite outcomes which have their own catastrophic results. So, impacts of economic sanctions cannot be estimated less than a real war.

This essay is going to affirm that Iran nuclear deal from an individualistic point of view is an efficient deal. Furthermore, sanctions re-imposition is against individualistic values of Iranian people because the opportunities to achieve moral well-being and human capital accumulation, being the main forces of any changes in a society, will be lost.

Making JCPOA Sense

The JCPOA is an agreement on the nuclear program of Iran reached in Vienna on July 14, 2015 between Iran, the P5+1 (the five permanent members of the United Nations Security Council—China, France, Russia, United Kingdom, United States—plus Germany). On 16 January 2016 it was announced by the International Atomic Energy Agency that Iran had adequately dismantled its nuclear weapons program, allowing the United Nations to lift sanctions immediately. Hence, the oil embargo and financial sanctions were lifted. It was a big moment for Iranian people to access to global markets more freely and follow their own well-being, but there were many controversial arguments in favor of or against the JCPOA in the United States which made the perspective unclear. In spite of European Union, China and Russia objections, on May 8, 2018, the United States withdrew from JCPOA. As a consequence, the risk of doing business in Iran increased dramatically for the multinational companies that operate in the Iran’s market.

Currently, sanctions can be categorized into 2 sections: 1) Sanctions which are re-imposed by US and 2) Sanctions which have been still lifted by EU and UN through JCPOA and Security Council resolution number 2231.

Impacts of JCPOA

Withdrawal on Iranian People: Undoubtedly, maximizing well-being in an isolated society is farfetched issue, though there is no guarantee that in a free society one will improve his well-being. Based on the comprehensive regime of sanctions, accessibility to Iran’s markets is restricted, and the outcome will be people’s unwanted deprivation, and aggression purposefully toward individuals’ choices. (3)

Due to JCPOA withdrawal, the United States gave a clear message to every entrepreneur that Iran no longer is a secure destination for investment; therefore, risk of investment in Iran and even exportation of products to Iran is tremendously increased. Without access to foreign investments and technologies, economic flourishing is like a dream.

Although one can claim that free access to information, humanitarian aid or consumer goods are not restricted by sanctions, cost of the access will increase. Furthermore, standard of living will diminish dramatically due to hardship in access to markets and it gradually leads to economic depression.

Avoidance from Reengineering the Society

the main reason to impose sanctions is to change one state’s behavior. In a broad context, it can be called reengineering a society to see a kind of revolution. According to this, “whenever the outcome of user-owner decisions about their properties is not liked by the community of social engineers (people, that is, who are not the user-owners of the things in question and who do not have a contractually acquired title to them), it has the right to interfere with the practices of the actual user-owners and determine the use of these means, thereby restricting their property rights.” In other words, JCPOA was a framework to restrain Iran’s nuclear program, but after sanctions re-imposition, in particular (financial sanctions such as money transactions, foreign investments, and SWIFT accessibility), it was decided by the United States to restrain people’s choices.

In conclusion, these are the real impacts of re-imposed sanctions on Iranian individuals. Iranian people have restricted choices to decide what actions they can take to improve their properties and well-being because “the community of social engineers has the right to determine unilaterally what is or is not a preferred outcome, and can thus restrict the property rights of natural owners whenever, wherever, and to the extent that it thinks necessary in order to produce a preferred outcome.”

As Raimondo truly states: “Sanctions represent the opposite of a just war: from wars that only involved soldiers, we have moved to wars that only involve civilians. The concept of economic sanctions as a weapon also assumes international economic regulations and enforcement agencies, setting up a cadre of bureaucrats who sit in judgment of “outlaw nations”: in effect, the apparatus of world economic planners.” (5)

Now, planners use their own discretion to decide which type of investments and what kind of products are allowed to enter to Iran’s market. That is why individualistic values are under pressure and sanctions not only help to restore them, but also undermine their position in the society.

Footnotes

  1. L.L.M in International Business and Economic Law, Matin.pedram@gmail.com
  2. The United States re-imposed sanctions in 2 phases:
    Phase 1: After passing a 90-day mark on August 6, 2018 the following sanctions have been snapped back on Iran:
    Sanctions on Iran buying or acquiring U.S. dollars;
    Sanctions on Iran trading gold and other precious metals;
    Sanctions on Iran’s sale, supply or trade of metals such as aluminum and steel, as well as graphite, coal and certain software for “integrating industrial processes”;
    Sanctions on “significant” sales or purchases of Iranian rials, or the maintenance of significant funds or accounts outside the country using Iranian rials;
    Sanctions on issuing Iranian debt;
    Iranian auto sanctions.
    Phase 2: At the end of the 180-day interval on November 4, 2018 another set of sanctions have been clamped down on Iran:
    Sanctions on Iran’s ports, as well as the country’s shipping and shipping sectors;
    Sanctions on buying petroleum and petrochemical products with a number of Iranian oil companies;
    Sanctions on foreign financial institutions transacting with the Central Bank of Iran and other Iranian financial institutions;
    Sanctions on the provision of certain financial messaging services to Iran’s central bank and other Iranian financial institutions;
    Sanctions on the provision of underwriting services, insurance, or reinsurance;
    Sanctions on Iran’s energy sector. (FAQ, www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_winddown_faqs.pdf, August 6, 2018)
  3. “Natural law theory justifies talk about both absolute and relative rights. It is always, absolutely, wrong for someone to harm another – to injure a basic aspect of the other’s well-being – purposefully or instrumentally.” (Chartier, Gary, Natural Law and Economic Justice, Cambridge University Press, 2009, p.22)
  4. Hoppe, Hans-Hermann, A Theory of Socialism and Capitalism, the Ludwig von Mises Institute, 2010, p.144.
  5. Raimondo, Justin, “Evil of Sanctions”, The Free Market 16, no. 4, (April 1998)
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