US sanctions push Iran’s economy further onto its heels

US Special Representative for Iran Brian Hook said US sanctions had cost Iran billions of dollars in oil revenues since May.
Wednesday 07/11/2018
An exchange shop displays rates for various currencies, in downtown Tehran, Iran, on October 2, 2018. (AP)
An exchange shop displays rates for various currencies, in downtown Tehran, Iran, on October 2, 2018. (AP)

TUNIS - Iranians continue to struggle with inflation as a new wave of US oil sanctions threatens to further derail Iran’s economy.

The United States has imposed its second set of sanctions on Iran’s biggest export, threatening to penalise buyers of Iranian oil in an effort to reduce its petroleum exports to zero.

“This will make everything substantially more difficult if not impossible in some areas for Iran,” Farhad R. Alavi, managing partner of a Washington firm that specialises in sanctions and export law, told the New York Times. “Revenues are coming down and costs are going up.”

US Special Representative for Iran Brian Hook said the sanctions had cost Iran billions of dollars in oil revenues since May, when US President Donald Trump pulled out of the Iran nuclear deal, calling it the “worst ever” agreement negotiated by the United States.

Hook said the sanctions resulted in 1 million barrels per day of Iranian oil being taken off the markets. “That alone has reduced the regime’s revenues by more than $2 billion,” he said.

The sanctions have taken a toll on Iranian citizens, who are reeling from the effects of sky-high inflation and steeper costs.

“Check the shops here one by one, there are no customers,” Tehran store owner Hossein Ahmadi told the Associated Press. “People have kept their money for rainy days out of fear of sanctions while rent of the shop has gone up.”

The rial, Iran’s currency, has been plummeting for months and is trading at 150,000 to one US dollar, more than three times the rate of a year ago. As a result, Iranians are paying more for basic goods, such as clothing and food, and the rial shows no sign of trending upward.

The United States hopes to influence Iran’s leadership by stoking outrage among its citizens, who Hook said Washington believes have lost confidence in their leaders.

Popular unrest bubbled up last December when the country’s economic downturn ignited anti-government protests, resulting in 5,000 reported arrests and at least 25 deaths.

Though demonstrations are more sporadic this year, public outrage hasn’t cooled over the government’s costly dealings, including in Syria and Iraq, where Iran is funding an array of militias.

“The government is wealthy, it sells oil abroad but it does not care about ordinary people,” street vender Mohammad Ghasemi told the Associated Press, as he condemned the country’s use of national funds.

Iran’s withdrawal from the civil war in Syria, where it backs Syrian President Bashar Assad, is one of 12 demands the United States said must be met by Tehran if sanctions are to be lifted.

Trump, speaking November 2, said his objective was “to force the regime into a clear choice: either abandon its destructive behaviour or continue down the path towards economic disaster.”