Ignore regime rhetoric, US sanctions are hitting Iran hard

By Dr. Majid Rafizadeh

Iran’s state-controlled Persian news outlets this week put significant emphasis on disregarding US sanctions and threatening a “10-times stronger response” to any hostile move by Tehran’s opponent.

The newspaper Etemad quoted Ali Shamkhani, the Secretary of the Supreme National Security Council and close adviser to Ayatollah Ali Khamenei, totally dismissing US sanctions, in particular the recent ones that were imposed on Iran’s automotive sector.

According to Fars News and the Iranian Students News Agency (ISNA), Shamkhani pointed out: “Our nation will prove that, as Saddam (Hussein) is buried in Tikrit and as Baghdad is controlled by those forces of the region that desire freedom, the US sanctions will lead nowhere due to our domestic, regional and international resolve.” It is worth noting that hard-line politician Shamkhani was appointed by the so-called moderate president of Iran, Hassan Rouhani.

Other Iranian leaders, including the supreme leader, also frequently boast about the country’s self-sufficiency and self-reliance when it comes to the economy.

But such a dismissal of US sanctions, as well as the rosy picture of the economy depicted by the regime, appears to be totally detached from reality. The latest developments and policy changes reveal that the theocratic regime is extremely concerned about the US sanctions.

The sanctions are exacerbating the state’s economic crisis and threatening the repressive rule of the Islamic Republic. For instance, while Iran has long held a tight grip over currency trading in foreign exchange markets, it has recently loosened many of its restrictions on the trading of the rial or the dollar. By relaxing the country’s currency laws, the ruling mullahs are attempting to neutralize the negative impact of US sanctions.

This should illustrate the fact that the re-imposition of sanctions by the Trump administration has brought negative repercussions for the Islamic Republic. In addition, according to ISNA, the head of the Iranian parliament’s economic committee, Mohammed Reza Pourebrahimi, has stated that Tehran is also allowing the currency exchange offices to import gold. This further demonstrates the notion that the Islamic Republic has become desperate to bring gold and hard currency, specifically foreign currency, into the country.

To Iranian leaders’ dismay, the EU has proved to be less influential than it hoped in assisting and benefiting Tehran with increased trade in order to insulate the Islamic Republic from the negative impacts of US sanctions and Washington’s withdrawal from the Joint Comprehensive Plan of Action.

It is important to point out that any American or non-American entity that assists Iran’s exchange offices in obtaining the US dollar, or even deals with Iran’s currency, will also be subject to US sanctions.

Despite its efforts to buoy and strengthen its currency by relaxing its regulations, Tehran is doomed to fail.

Dr. Majid Rafizadeh

Another measure that the Iranian leaders have been taking is to store oil on a fleet of supertankers. Iran also resorted to this strategy of floating storage for its oil before it reached an agreement with the Obama administration over its nuclear program and before four rounds of UN Security Council sanctions were lifted.

Many of the countries that buy oil from Iran cut back on their imports from Tehran in the month of August.

Despite its efforts to buoy and strengthen its currency by relaxing its regulations, Tehran is doomed to fail. The regime’s economic problems are too deep to be resolved by passing uninformed and random currency laws. The Iranian regime’s financial corruption, misuse of public funds and the widespread banking crisis are among the major reasons behind the present currency and economic crises. In fact, these problems are systemic and exist deep within Tehran’s economic infrastructure.

Although Iran is brushing aside the US sanctions as insignificant, Tehran is trying to chart ways to brace for them. In early November, Washington’s secondary sanctions will hit Iran’s oil sector — the regime’s major revenue source.

But why are the Iranian leaders so determined to paint a picture showing that the US sanctions are insignificant?

First of all, the regime does not want to show signs of weakness. From the perspective of the Iranian leaders, any manifestation of weakness will not only embolden and empower the overwhelming majority of the Iranian people who oppose the regime, but will also strengthen the alignment of regional and global powers in containing and curbing Tehran’s aggressive foreign policy.

Secondly, the regime is the paymaster of many militias and terror groups in the region. In order to maintain its quality of being appealing to Shiite militias and in order to attract more recruits, the Islamic Republic is obliged to show economic strength.

Third, one of the core pillars of the mullahs’ revolutionary ideology is anti-Americanism. Acknowledging that the US sanctions have impacted Tehran’s “self-sufficient” economy would be nothing short of admitting defeat by the US, aka the “Great Satan.”

Despite the rhetoric coming out of Tehran in dismissing Washington’s actions, the sanctions have already began to harshly bite the theocratic establishment.

 

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  • Dr. Majid Rafizadeh is a Harvard-educated Iranian-American political scientist. He is a leading expert on Iran and US foreign policy, a businessman and president of the International American Council. Twitter: @Dr_Rafizadeh

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