Iran, protests, and sanctions

Key Takeaways

Recent Iranian protests are largely driven by economic hardship exacerbated by 47 years of U.S. sanctions, alongside human rights demands.
U.S. sanctions on Iran, implemented by nearly every president since 1979, have not consistently followed expert recommendations for effectiveness.
Sanctions, intended as a non-military tool, can cause severe economic misery, impacting essential goods and leading to preventable deaths.
Despite calls for regime change, sanctions have also unintentionally benefited entities like the Islamic Revolutionary Guard Corps (IRGC) by reducing competition.

Protests erupted in Iran, initially sparked by a plummeting currency and vendors striking due to lack of profit, with a call for nationwide demonstrations on January 8th.
Protesters expressed demands for human rights, freedom, and economic stability, challenging the Iranian government.
Eyewitnesses observed widespread demonstrations, supportive car horns, and chants against the dictatorship, reflecting hope for a revolution.

Following the 1979 revolution, Iran's new government debated economic policies and constitutional structure, aiming to prevent economic exploitation.
Prior to 1979, Iran under the U.S.-backed Shah had strong economic ties with the West, particularly in oil, with U.S. and UK companies holding significant shares.
Political economist Iva Layla Pesaran's research focuses on how the post-revolutionary government sought to define itself against Western influence and achieve economic independence.

The November 1979 U.S. embassy seizure in Tehran, where 52 Americans were held hostage, led to the U.S. freezing Iranian assets.
This event solidified Iran's decision to reject foreign investment and adopt protectionist policies, shaping its economic identity in opposition to the U.S.
During the 1980s, Iran's self-imposed economic isolation, compounded by the 1980-1988 Iran-Iraq War, severely hampered its development and ability to import essential goods.

In the 1990s, Iran shifted towards opening its economy, increasing trade with non-U.S. partners and attracting foreign investment, including re-opening the Tehran stock exchange.
This period of liberalization led to economic growth, a strengthening middle class, and a diversified economy across services, manufacturing, agriculture, and oil.
Beginning in 2012, Iran faced its first major economic contraction in two decades due to comprehensive international sanctions aimed at its nuclear program.

U.S. sanctions in the early 2010s, which pressured countries to reduce Iranian oil imports and global banks to cease dealings, led to increased inflation and currency devaluation in Iran.
This economic pressure contributed to the 2015 Iran nuclear deal, where sanctions were eased in exchange for Iran rolling back its nuclear program.
Despite sanctions being lifted, U.S. attempts to encourage banks to re-engage with Iran faced resistance due to years of warnings, creating an "over-compliance" culture that hindered economic relief.

Donald Trump reimposed sanctions in 2018, leading to a worsening of Iran's economic conditions with rising inflation and falling GDP.
Sanctions can inadvertently benefit entities like the Islamic Revolutionary Guard Corps (IRGC), which controls an estimated 50% of Iran's economy, by reducing international competition.
Intended as a bloodless tool, sanctions increasingly cause economic misery, impact access to essential goods like medical supplies, and contribute to preventable deaths, effectively becoming a form of warfare.