(/sites/default/files/uploads/2014/12/iran_2677161b.jpg)There has always been an argument claiming that economic sanctions normally do not yield any result due to the notion that economic sanctions do not target the ruling elite and governmental official, but the ordinary people. This argument is partially accurate.
Nevertheless, we need to remember that some targeted economic sanctions against the Islamic Republic (particularly the sanctions in oil and gas sectors and financial and bank institutions) did endanger the hold on power of the ruling cleric in Iran, particularly the Supreme Leader, Ayatollah Ali Khamenei. That was the primary reason behind pushing the Iranian politicians to come to the negotiation table in nuclear talks.
On the other hand, the other side of the argument is that if economic sanctions are lifted, the major beneficiaries would be the ordinary people and the civilians. This argument would be accurate if the political and economic system of the given state is democratic, allows open opportunities for all, encourages the private sector, allows transparency, and holds those corrupt officials who commit illegal economic dealings accountable.
The Iranian political and economic system is devoid of the aforementioned standards. In fact, in states which the political system is mainly authoritarian or theocratic, and the economic system is monopolized by few people at top and is state controlled, any increase of wealth or flow of money will inevitably strengthening the ruling elite rather than the ordinary people.
To substantiate this argument, let us take a look on the ground in the Islamic Republic after the sanctions relief.
At the beginning, a majority of Iranian people were hoping that economic sanctions relief would alleviate their suffering, improve their standards of living, and push many families above the poverty line. Almost a year has passed since the Iranian government has been receiving sanctions relief.
After the interim nuclear deal and extension of the negotiations between the six world powers (known as the P5+1: China, France, Germany, Russia, the United Kingdom, and the United States) and the Islamic Republic, the Iranian government had received an estimated $7 billion. Iran continues to receive approximately $700 million every month under the extension deal.
In addition, there has been some sanction suspension with respects to some of Iran’s major industries, including Iran’s auto sector, gold and precious metals, as well as Iran’s petrochemical exports. The Iranian currency, the rial, has appreciated due to the sanctions relief, Iran’s oil and non-oil exports have increased, its economy is showing signs of stabilization, Tehran’s stock exchange has soared and Iran’s exports and business dealings with several countries have ratcheted up.
The suspension of sanctions has definitely given both psychological and financial support to the Iranian government. But the real question is how this money is being spent and which institutions benefit primarily from this sanctions relief. Are ordinary people benefiting from these sanctions relief and flow of money?
Nevertheless, some Iranian civilians have begun to believe that even economic sanctions relief or even the lifting of the whole economic sanctions regime from the Iranian government are not going to assist civilians, their financial day-to-day activities, or bring concrete changes on the ground.
Four major institutions are benefiting mostly from the economic sanctions relief: Iran’s military-industrial complex, the Office of the Supreme Leader, Ayatollah Ali Khamenei, a few top business figures who are connected with the government, and the Iranian Revolutionary Guard Corps (IRGC), through either legal and illegal imports and exports.
For example, the IRGC controls and owns a considerable amount of shares in the aforementioned industries which have witnessed sanctions relief. In the petrochemical industry, The IRGC military-industrial complex owns Zagros Petrochemicals; 40% of Pars Petrochemical Company, part of Arak Petrochemicals; 25% of Kermanshah Petrochemicals; as well as 19% of the shares of Maroun Petrochemicals.
This phenomenon of the monopolization of the economy applies in other sectors of Iran’s economy as well. When it comes to Iran’s economic system, the Supreme Leader and IRGC do have a considerable amount of control and shares in almost all industries including financial institutions and banks, the transportation industry, automobile manufacturing, mining, commerce, and oil and gas sectors.
As a result, these types of sanctions relief will mostly benefit the ruling elite, primarily the Supreme Leader and Iran’s military-industrial complex, IRGC. Iranian people will hardly observe any benefits from this economic sanctions relief or lifting of economic sanctions.
It appears that the easing of sanctions are strengthening the ruling elite without any sign of redistribution of wealth. This is predominantly due to the fact Iran’s economic system is a state and military controlled system, it lacks transparency, as well as the reality that it is crippled with widespread corruption by the ruling elite and few on top.
If the intention of economic sanctions relief is to assist the Iranian people and alleviate their suffering, there ought to be more efficient approaches to develop some types of targeted sanctions relief (for example, being directed at Iran’s educational system, health care, etc.) which aim at empowering Iranian civilians and primarily the middle class.
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