In July, Iran reached a landmark nuclear nonproliferation deal with the United States and five other world powers. The recent failure by Congressional Republicans to block the deal cleared the way for the White House to begin the process of lifting Iranian sanctions. For a country that has been under the thumb of sanctions for decades—and crippling sanctions for over five years—the hope of a stronger Iranian economy, cleaner air, increased travel and higher employment is tantalizing. But experts agree that there is still a long road ahead for Iran, and most Iranians are not celebrating quite yet.
The Impact of the Sanctions on Iran
Iran has been under varying levels of sanctions from the United States since the Iranian hostage crisis in 1979. For instance, United States firms have long been largely prohibited from trading with or investing in Iran. However, after Iran was found noncompliant with its international nuclear nonproliferation obligations in 2005, these sanctions intensified and were implemented by other countries as well, including member states of the European Union, Korea, Canada and Australia.
In 2011, in response to a United Nations report warning about Iran’s nuclear activities, the United States redoubled its efforts to isolate Iran economically, refusing to conduct business with any financial institutions that dealt with Iranian banks. Additionally, the United States deeply curtailed Iranian oil revenue with extraterritorial sanctions. The European Union and the United Nations have imposed similar sanctions. The EU has also frozen an estimated $4 billion in Iranian assets.
The effect of these sanctions over the past few years has been devastating for Iran, particularly the Iranian middle and lower classes. Some sources estimate that Iran’s economy has contracted by 20 percent since 2010. (As a comparison point, the United States economy shrunk by about five percent in the aftermath of the 2008 financial crash and recession.) The effect of the oil embargo alone cost the Iranian economy an estimated $4 to $8 billion a month, as oil exports, which accounted for roughly half of Iran’s revenue, dropped by more than 40 percent in 2012 alone.
At the same time, unemployment has risen, especially among Iran’s large population of young adults (a disproportionate 35 percent of the population is between the ages of 15 and 29). While the country’s official rates put unemployment at around 12 percent, some analysts put the actual figure at twice that, with unemployment rates in Iranian youth as high as 40 percent. Iranian youth wait an average of three years for their first job, and are
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