Soleimani Elimination Highlights Restricted Impact of Economic Sanctions

The economic sanctions imposed on Iran over the last two decades notwithstanding, no successful impact has been registered that could bring about a change of regime or a change in the conduct of the present regime in Iran. The recent elimination of Qasem Soleimani reflects a US realization of the situation. Commentary


Photo: AP

The economic sanctions imposed on Iran have existed in various formats since the early 2000s. Some of these sanctions reached a peak prior to the JCPOA of 2015. The JCPOA, signed during the presidency of Barack Obama, severed the continuity of the sanctions by making them conditional. Iran played along and received billions, frozen by US banks years before. As Donald Trump became President, he decided to pull out of the agreement with Iran and reinstated – even exacerbated – the previous sanctions. Iranian President Hassan Rouhani claimed recently that the sanctions led to the loss of about US$ 200 billion to Iran from oil sales, which diminished and reduced the credit granted to Iran.

Nevertheless, the elimination of Qasem Soleimani may be interpreted as reflecting US frustration at the restricted power of the economic sanctions. These sanctions failed to bring about a change of regime or a change in the conduct of the present regime under the "Maximum Pressure" policy the White House has been implementing over the last few years. The 15 steps outlined by Mike Pompeo, US Secretary of State, as a measure for the effectiveness of the economic sanctions, have not been achieved. Iran made no steps in the right direction, and the plan remained as a hollow, ineffective title.

The sanctions led to changes in the Iranian economy that are expected to increase the redundancy of the country's revenue sources and reduce their effectiveness in the future. While Iran has relied, in the past and to this day, on the energy market as an almost exclusive source of revenue – a fact that made the Iranian economy vulnerable – it appears to have taken a different direction in the past year. The Iranian government has recently announced a massive investment in minerals. Iran also maintains an academic institution that is a leader in scientific fields, capable of consolidating an ecosystem of technology companies which may tap into the markets of countries in the Gulf, Central Asia and the Middle East with whom Iran maintains good relations.

Iran's New Direction Pursuant to the Sanctions

Iran took advantage of the sanctions by moving in yet another direction – strengthening its economic connections with China and Russia. China exploits Iran's financial vulnerability to close deals at good prices. By doing so, it provides Iran with a financial oxygen line that does not depend on the US Dollar and is consequently unaffected by the sanctions. Similarly, Russia exploits Iran's vulnerability to intensify the trade between the two countries. In addition to China and Russia, a search of the Internet will reveal dozens of names of European companies that have violated the US sanctions. These are just the names of companies "caught in the act". Presumably, there are more.

Additionally, Iran operates a network of shell companies in countries providing tax havens, with the intention of laundering tens of billions of dollars generated by the oil business. The unveiling of documents associated with the Formations House affair demonstrates the scope of this process, which takes place right under the noses of the western intelligence agencies, including those of Israel. It is safe to assume that the Iranians use these funds, among other things, to finance the operations of their Islamic Revolutionary Guard Corps (IRGC) and their nuclear program.

Not Everything is Black

The sanctions have, indeed, constituted an inhibiting factor regarding the Iranian plans. The economic pressure exerted on the regime increased the pressure exerted on the civilian population in Iran. There is a growing sense of resentment and displeasure, and every security-related decision involving the operations of the IRGC and the Iranian nuclear and missile programs, as well as other projects, is received by the Iranian public with growing anger. As such basic services and supplies as food, fuel, the Internet, electrical power and health care are not available – who cares about national security? At the same time, economic sanctions, as stated, are restricted in the extent of their impact, mainly with regard to such totalitarian states as Iran.

In such states, the regime, through its various internal security and police forces, oppresses the weakened segments of the population while feeding and pampering the stronger segments. That is the reason why we have not yet witnessed an all-out revolution in Iran, despite several eruptions of popular uprising in recent years. The recent elimination of Qasem Soleimani is a continuation of that policy. Having monitored the situation, the Americans came to the realization that Soleimani has no intentions of changing his conduct, the economic pressure notwithstanding, so they opted for a kinetic solution to counter the terrorist activity of Iran.



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