Lest some mistakenly believe otherwise, the sanctions against Iran are indeed taking their toll on the Iranian economy. This could create more pressure on Iran’s leaders to give in to Israel’s demand to dismantle its nuclear program.
P5+1 and Iranian negotiators meet. (Fabrice Coffrini/AFP/Getty Images)
In the wake of Israeli Prime Minister Benjamin Netanyahu’s speech to the US Congress, the Israeli economic newspaper, Globes, researched the extent economic sanctions are hurting Iran. In his address, Netanyahu called on the P5+1 to demand that the lifting of sanctions be tied to concrete changes in Iranian behavior in the region. Globes concluded that the sanctions are indeed significantly hampering the Iranian economy.
According to the report, Iran’s GDP decreased 5% in 2013, the first time that the economy has shrunk since 1995. The GDP began growing again in 2014, between 1% and 1.5%, due to the lifting of sanctions. The sanctions issued in 2010 have retarded the growth of the Iranian economy 15-20% since that time.
The sanctions against Iran have been focused on its profitable oil and gas industries. As a result, in 2014, the number of barrels of oil exported fell from 2.5 million daily to only 1.1 million. About half of this decline is estimated to be due to sanctions. The sanctions have also prevented Iran from repatriating its oil profits. Approximately $80 billion in foreign currency is currently trapped outside of Iran.
As for the everyday Iranian, unemployment has reached 20% and inflation this month is expected to be 25% on an annualized basis. It is worth noting that the Iranian central bank reported record inflation of 45% in 2013, although outside estimates say that inflation reached 50-70%. The decrease in the rate is attributable to the easing of sanctions.
Although sanctions have clearly hurt the Iranian economy, it remains unclear that they have been effective in changing Iran’s actions. As noted in Netanyahu’s address, the International Atomic Energy Agency (IAEA) still believes that Iran may be hiding military nuclear facilities. Nor has Iran stopped calling for the destruction of Israel or conducting military exercises to prepare for conflict with the United States. Nonetheless, Netanyahu is of the opinion that sanctions have effectively slowed the progress of the Iranian nuclear program, and that lifting sanctions too soon will allow Iran to quickly achieve a nuclear weapon once the 10-year agreement currently being drafted expires.
By: Lauren Calin, United With Israel