Sanctions have become “the tool of choice” for the United States in the 21st century regarding foreign policy. The U.S. government first imposed sanctions, defined as commercial and financial restrictions applied against states, groups or individuals, on Iran in the early 1980s after the country was designated as a state sponsor of international terrorism. The U.S. has increased sanction usage worldwide by 900% in the last 24 years. Narges Bajoghli and Vali Nasr’s new book, “How Sanctions Work: Iran and the Impact of Economic Warfare,” published by the Stanford University Press in February., explains how these sanctions have “permanently changed” Iran. In an online seminar on Wednesday, March 13 hosted by Prof. Naghmeh Sohrabi (HIST), director for research at the Crown Center for Middle East Studies and the Charles Goodman Professor of Middle East History at Brandeis, the co-authors took attendees on a deep dive into how sanctions have historically affected Iran and how they will continue to shape Iranian policy. 

Bajoghli and Nasr are both professors of Middle Eastern studies, as well as of Anthropology and International Affairs, at Johns Hopkins University. When asked why they decided to write the book, Nasr remarked that “policy conversation [about sanctions] is completely divorced from… [a] grounding in actual facts” and said that their goal was to “bridge social science learning with policy making.” They “recruited over a dozen economists and social scientists with experience doing research in Iran.” Nasr noted that sanctions have “often been studied with a focus on policy implementation … but that we do not have a comprehensive look at how sanctions affect the targeted society.” 

Bajoghli stated that it was crucial for them to bring the discussion of sanctions, which is usually very abstract, down to the human level. “We often think about sanctions as the way in which they impact the behavior of a country,” added Nasr. Instead, he and Bajoghli have found that “in reality… sanctions are a powerful tool for state building… and have shaped the Islamic republic and its government in very fundamental ways.” 

The U.S. currently imposes sanctions on Iran that ban nearly all trade – most notably targeting the energy sector, financial sector, and the manufacturing, construction, shipping, mining, textile and automotive industries. In the book, which devotes a chapter to how sanctions have been implemented and increased over time, Bajoghli and Nasr explain that “when sanctions are developed in the interwar period…, [they] develop as a way to punish rogue states instead of sending troops.” U.S. foreign policy has adopted the use of sanctions with various restrictions in lieu of total embargoes in order to “seem more moral,” according to Bajoghli and Nasr. 

This is a “question of semantics and discourse … a question of making these tools seem more moral,” according to Bajoghli. She believes that although targeted sanctions are meant to be different than broad based sanctions or embargoes, they end up functioning the exact same way in society. She attributes a “huge increase in the level of poverty” in Iran to sanctions, especially due to the Trump administration’s maximum pressure program. 

Sanctioning Iran has led to an unforeseen consequence — “the creation of new social classes and new social bonds,” which is one of the main focal points of the book. Considering the significance of studying the social effects of sanctions, Bajoghli said that nothing can ever be studied in a vacuum. By “map[ping] the [social] effects of sanctions on top of everything else going on in the country, we’re able to put this research in [a] broader trajectory.” She described the changing society as an obvious and logical impact on the everyday lives of people. 

Finding ways to bypass sanctions illegally is possible, but only available to people in the higher socioeconomic classes of Iran. Bajoghli explained that “the entire political culture [of Iran] is defined by not being bullied by the United States or the West… so [people] figure out [opportunities] to bust through sanctions,” which at their most profitable are only available to the political elite. “Doing trade becomes illegal [and] is a very expensive endeavor and carries with it potential criminal charges…[you] need a lot of capital at your disposal… as well as the backing of institutions to engage in black market trade.” 

This backdoor route for illegal business has caused high levels of corruption within Iran’s higher classes. Cash flows into the economy “that needs to be washed,” and this capital is often invested in the film and music industries as well as businesses tied to the Islamic Revolutionary Guard Corps. There is no trickling down through the economy, so these opportunities for black market trade, made possible by working around sanctions, create a new higher class in Iran. 

In contrast, the middle and lower classes in Iran experience a domestic scene with tougher access to goods. Many have fallen into poverty. Bajoghli said that this has turned a lot of people into laborers living off of day to day wages. However, a unique effect has been seen in that because of a lack of competition with foreign companies, “an autarkic economic system [has] developed[ed], [with] smaller businesses run by younger folks using Instagram and Whatsapp.” The rise in micro businesses is especially seen in the fashion industry as Iranian small business owners do not have to compete with foreign brands. 

Sanctions have locked Iranian society into an apparatus of economic disparity. According to Nasr, this “will not easily be changed,” as a wealth gap exists between the higher classes with access to “sanction-busting” financial opportunities and lower classes that get hurt by less access to goods. “The financial network, [the] supply chain, and [the] trade mechanism in Iran, [is] now essentially all Iranian business is tied to,” and this isolation is profound. 

Sohrabi wondered what state building veritably means as a consequence of sanctions, and Nasr’s point on the repercussions of Iran’s societal change is a fitting illustration: “The country has almost perfected the business of going around sanctions… [so] once the country as a whole makes massive investments in this mode of economic development, as flawed as it is…, its entire political economy and state structure [will] ... be woven around it.”

In regards to what sanctions on Iran mean for U.S. foreign relations, the sanctions levied on Iran have been deemed economic warfare by the Iranian state and this has hardened the political culture of the country. Bajoghli said that this response has only increased because of the maximum pressure sanctions under the Trump administration. Nasr stated that sanctions “will only work if the other side calculates that if it changes behavior it will go away,” but even though he thinks that the sanctions against Iran are problematic, this is “not to say that sanctions are an absolute evil [if they are used correctly].” 

Nasr elaborated on this tension, pointing out how the Trump administration’s maximum pressure sanction campaign was an erroneous attempt to sway Iranian behavior. Trump’s maximum pressure plan reimpose sanctions on Iran that had already been lifted when Iran met requirements, according to the 2015 Joint Comprehensive Plan of Action, or JCPOA, which involved multiple countries and was in the process of abating Iran’s nuclear capabilities. Nasr said that “after 2015, the understanding in Iran was that sanctions will never come off” even if they adhered to the JCPOA, which the Biden Administration did not rejoin. Rigorous sanctions will be maintained by the Biden Administration until Iran returns the full implementation of the deal. 

However, Nasr believes that instead it will be impossible to get Iran back in the deal unless the U.S. lifts its sanctions. Bajoghli and Nasr recognize that taking a longitudinal view of history is necessary for understanding the effectiveness of sanctions, and this has ostensibly been forgotten by recent administrations in the U.S. Nasr said that now “Iran won’t go to the table because they have learned how sanctions work… [and] how [American] sanctions are sticky… [and] very hard to remove because they become politicized.”

In the case of the U.S., the intent of sanctions is no longer clear in terms of the real effects on Iranian society. Nasr asked attendees to question the goal of American sanctions on Iran — “are we just pretending that sanctions are doing something, or are we [imposing] meaningless sanctions… that sound good? Or are [we] using sanctions to punish or deter? Or [do we want] to change the regime entirely?” 

If “the American political system is… paralyzed” and seemingly unwilling to lift sanctions, as Nasr said, “countries [will] begin to shape [themselves] around this reality.” Not only does this manifest unique effects on Iran’s economy, which have the potential to permanently shape the country’s financial systems according to corrupt black market trade opportunities, but Iran’s own foreign policy will become that of a country increasingly provoked by economic warfare. Bajoghli and Nasr emphasized that this needs to be taken seriously, as they believe that eventually this will escalate until Iran “respond[s] as if [it is] at war,” which is antithetical to the original intent of sanctions. 

Sanctions are supposed to be an alternative to war — former President Woodrow Wilson famously explained that the U.S. should “apply this economic, peaceful, silent, deadly remedy” with “no need for force.” Bajoghli referenced this quote to illustrate how the reality of sanctions has become drastically different from how the countries imposing them once envisioned them. Sanctions have strengthened the Iranian state and intensified their military propensity while impoverishing its population. She argued that “sanctions are not an alternative to war — they have become the cause of war. We [can] see how Iran has developed its foreign policy…, creating [an] offensive force… [and] now you have a shadow war…[including an increase of] sanctions on countries allied with Iran.” These targeted states will push back and form their own alliances against the West. 

Often the question is “do sanctions work?” said Bajogli. Instead of thinking about sanctions as impacting a country’s behavior in black and white terms of success according to the imposing country, she argued that especially in the context of American sanctions on Iran, sanctions should be thought about in terms of the political waves they create and how they work in terms of their lasting impact on society. As Nasr said, their goal is to “call for ways that sanctions as a tool have to be used differently if they are to be effective.” The seminar posed an introduction to Bajoghli and Nasr’s book and served as an illuminating discussion in its own right by assessing not only the ways that Iranian society is being transformed but offering an opportunity to consider the connection between social science and policy. 

A video recording of the event is linked on the Crown Center for Middle Eastern Studies website.