Remove sanctions

Iranian middle class will make Iran more internationally-friendly. Sanctions will not.


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Remove sanctions
by Roxanna Sharifi
27-Oct-2008
 

Please allow me to make a couple of possibly radical points, and then explain myself.

First, sanctions help the Iranian government.

Second, removing sanctions against Iran will actually be a more powerful tool to creating an internationally-friendly Iran.

Essentially the purpose of sanctions is economic isolation. That step seems to work. But proponents of sanctions think that economic isolation leads to governmental weakness. But we don't see this happening in Iran. Why not?

Generally speaking in Iran today, we have two very identifiable camps: religious poor and connections-heavy elite. I call the elite "connections-heavy" because Iran lacks a solid rule of law, and therefore, many individuals who reach economic success in Iran do so through their connections. What this means therefore, is that the rich/elite in Iran usually achieve these positions not through a level playing field, but through individual connections and power. So, we've got those two camps. But do we have a camp that is in the middle ground? No.

What Iran lacks is a solid middle class. How does this relate to sanctions?
Well, sanctions prevent the growth of a middle class. Blocking Iran from the international economic community means fewer jobs, fewer opportunities, etc.

The elite rich can afford to ignore sanctions, buying what they want at the Dubai-marked up prices. When you can pay your way out of sanctions, what does this mean? No INCENTIVE to alter the status quo.
The religious poor can barely afford a thing, so government handouts and sympathy keep them going. When you're too busy trying to live on a month-to-month or day-to-day basis, what does this mean? No TIME to alter the status quo.

And what does this mean for the Iranian government? Well, with the elite/rich busy shopping in Shahrake Gharb and placing orders for hot items from Dubai, and with the religious poor struggling to survive, that's right, no one comes knocking on the government's door demanding much of anything. This is exactly why and how sanctions actually HELP the Iranian government maintain its power.

So, that was first, sanctions help the Iranian government. Now let me explain why removing sanctions will create a more internationally-friendly Iran.

We've seen that the two predominant camps in Iran don't actually have a strong incentive lobby the government for change. And sanctions certainly do isolate Iran economically, but with the ironic effect of actually preventing the emergence of a middle class.

You might think, well wait a minute, if sanctions are removed, then those elite/rich will just gobble up the opportunities and everything will be just as it was before. But that is not the case. The international economic system, which Iran is currently left out of, is based on two drivers: capitalism and globalization. When these two forces enter a new environment, they enter with such force, overwhelming everything in their path, that even a dominant elite can't hoard all the opportunities (who hasn't noticed the invasion of Nokia, Toshiba, etc. billboards all over Tehran?!). In fact, it's this very power that has made so many people speak out against the negative effects of capitalism and globalization. But in Iran, we need these effects of capitalism and globalization to provide a level playing field and change the connections-heavy method of doing business in Iran.

Capitalism and globalization will replace the connections-heavy method of reaching the top with an innovation and entrepreneurial-heavy method of reaching the top. What does that mean? If you have a new business idea, capitalism is there for you, you don't need connections. If you have a new invention, capitalism is there for you, you don't need connections. If you and your brother want to start up a new bakery business shipping delicious "gaz" from Esfahan to Tabriz, capitalism is there for you, you don't need connections. What does this mean? You guessed it, the emergence of A MIDDLE CLASS.

So how does a middle class make Iran more internationally-friendly? Many scholars have argued that Gorbachev's fatal mistake was that he first gave the Soviet people a little taste of political freedom, before he had set any economic reforms in place. The result? A failure. But when Soviet leaders got serious about economic reforms, letting the Soviet Union participate in the international economic system, that was the powerful driver that led the people to demand more, opened the floodgates to the insatiable appetite of capitalism, allowed the emergence of a middle class, and ultimately changed the history books from "USSR" to "Russia".

It's no wonder that since 1991, we've seen an absolute explosion in Russia's middle class. Yes, there are still oligarchs out there, who hoard the opportunities for themselves, and scandals such as Yukos taught us that we haven't quite reached a level playing field in Russia. This only teaches us that capitalism needs the rule of law to develop properly. But Russia is only in the early stages of capitalism, compared to the robust over 200-year-old tradition of capitalism we see in the United States. All in all, creating a middle class is the first step. It's no coincidence that the Cold War died down as Russia became more economically open.

The only difference between that analogy and Iran is that the Soviet Union chose to dissociate itself from the international economic system, while Iran is forcibly left out of the international system because of sanctions.

When a country is allowed to participate in the international economic system, a middle class emerges. This middle class has the incentive to demand more international-friendly behavior from its government. Right now, the Iranian government can afford to use off-putting language that makes corporate CEOs shudder, precisely because there is no predominant group in Iran that would resist such behavior. But if average Iranians had their livelihoods tied into the international economic system, there would finally be the incentive coming from WITHIN Iran to rein in the government. As we have seen throughout modern history, over time, capitalism eats away at the power of national governments. Removing sanctions would allow a middle class to emerge in Iran, and this middle class would be the source of change in the Iranian government (remember how important bazaari-s were in the time of the shah?).

Now don't get me wrong, I think the groups in Iran that are fighting for political and social rights are doing good, but their numbers are small. Also, it is far easier for mis-interpreters of Islam to use the religion to counter political and social freedom than to counter economic freedom (if I recall correctly, the prophet's wife was quite wealthy!).

What Iran fundamentally lacks and fundamentally needs is a robust, capitalism-based middle class. Removing sanctions is the first way to encourage the growth of a middle class. After that, all we need is time. A revolution in Iran can occur, without overthrows, without violence, without needless confusion and chaos. It will be an economic revolution. Just let capitalism in to do its magic. Even MEK supporters should find this logic convincing. They claim to be the ones who want the overthrow of the current government more than anyone (dubious, but let's just give them the benefit of the doubt for argument's sake). If you really REALLY want the Iranian government to weaken and become a participant in the international order, there is no force stronger, not missiles, not rockets, not even nuclear weapons, than capitalism.

This interpretation of the role of sanctions leaves a lingering question. In the face of economic data and evidence showing the correlation between economic openness and political freedom, how could the United States, Israel and other countries be so hungry for more and more sanctions against Iran?

Unfortunately, the answer to this question seems to be a bit uglier. If sanctions are removed and things progress as the economists expect and as I have explained above, then Iran stands to become within a couple of decades, a new economic powerhouse and international friend in the Middle East. Unfortunately, some governments in the Middle East see the game as zero-sum and don't see the pie that can be enlarged for everyone. For a small country like Israel, an Iran that is the new economic girl-next-door, may leave Israel feeling like a slightly overweight girl at band practice.


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Abarmard: Trickle down

by Anonymous... (not verified) on

Abarmard: Trickle down economic or supply-side economics have never worked even in the US.

Google supply-side economics and read about it. It is not a sound economic theory. It was originally designed by the rich elite to get rid of spending programmas by looting the treasury...please read instead of reciting debunked standard scripts issued by the liberal wing of theocracy, the reformists.

Can't you see the financial melt down in the US because of this theory. Even Obama said the other day that trickle down economics don't work. Why do you choose to stay so uninformed?


Abarmard

Dear Parthian

by Abarmard on

Just to clarify, you are debating that her arguments are false, therefore sanctions and isolating Iran has worked?

1-Iran is not China and Iranian society is more politically active than China ever was. Therefore, you can' say her argument is false, since we have not tried other options. Your point however can be challenged based on what we have witnessed by the actions of the US, and I believe it has not worked.

2-You can assume that lifting sanctions won't help Iranian citizens, but you certainly have no proof. Therefore I would take her arguments, based on common sense that even if the rich in Iran gets richer, based on trickle down economics, many would benefit on the lower end. Again, we have witnesses your ways since the IR started, we have never seen what happens if sanctions are lifted.

3-People are not stupid but when you have many fronts to deal with, it's certainly more difficult. The warmongers in the west have justified Iranian government's position for the majority of Iranians inside and the citizens of the regional countries. Based on our historical data, we know that your ideology in dealing with Iran has failed, not only on government level but also social. Therefore I would take the author's side on this debate based on the fact that we have not run enough experiments to conclude what would give us a better result and utility. It's time to diversify our thinking and realize the realities rather than loop in wrong policies.


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SUGGESTION : Remove sanctions

by Faribors Maleknasri M.D. (not verified) on

What a peculiar suggestion. How could bankrupties as western countries make harm to islamic Republic of Iran by sanctions? The mighty and rich and most stabilized country in the region? However 1978/79 as the waésterns BA BUGH O KARNA begann their "SANCTION"s against that country the believers meant it is a great Blessing of God on us. Just those sanctions helped the honorable Iranian Nation to bring back Life in their country. In those days the sanction were the most unhuman action which was ever done against a nation. Until 1978 100% of medicin supply and 90% of food supply in Iran was done by imports. And suddenly recieved iranians nothing, no food no medicin. Today is the Islamic Republic of Iran a mighty exporteur of Food and Medical helps in all known categories. The honorable Iranian Nation is not afraid of so called sanctions. apparently they do not need any advise from abroad either.
I for my part think the american imperialism will disappear soon or late. The europians see just today and rightaway no other chance for themselves unless to cooperate with mighty state on the Gulf and have begann with their struggle in order to get rid of the american parasits. They mean: these parasits may go to hell and take their "sanction"s with themselves, we europians need the Islamic Republic in interesst of our energy supply. next winter stays allready on the door. Greeting


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SUGGESTION : Remove sanctions

by Faribors Maleknasri M.D. (not verified) on

What a peculiar suggestion. How could bankrupties as western countries make harm to islamic Republic of Iran by sanctions? The mighty and rich and most stabilized country in the region? However 1978/79 as the waésterns BA BUGH O KARNA begann their "SANCTION"s against that country the believers meant it is a great Blessing of God on us. Just those sanctions helped the honorable Iranian Nation to bring back Life in their country. In those days the sanction were the most unhuman action which was ever done against a nation. Until 1978 100% of medicin supply and 90% of food supply in Iran was done by imports. And suddenly recieved iranians nothing, no food no medicin. Today is the Islamic Republic of Iran a mighty exporteur of Food and Medical helps in all known categories. The honorable Iranian Nation is not afraid of so called sanctions. apparently they do not need any advise from abroad either.
I for my part think the american imperialism will disappear soon or late. The europians see just today and rightaway no other chance for themselves unless to cooperate with mighty state on the Gulf and have begann with their struggle in order to get rid of the american parasits. They mean: these parasits may go to hell and take their "sanction"s with themselves, we europians need the Islamic Republic in interesst of our energy supply. next winter stays allready on the door. Greeting


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but with the ironic effect

by makenomistake (not verified) on

but with the ironic effect of actually preventing the emergence of a middle class.

Dear Roxanne: Do you really think that the non-existence of middle class in Iran is accidental or existence of poverty?

What you have conveyed brilliantly in your essay, the mullahs have known all along; hence, the systematic and built-in safeguards against the formation of a viable and industrial middle class.

This is precisely why the Supreme Leader had to rein in Khatami and the reformers because he realized that if things progressed the way it did, the clergies and their power base will eventually oligarchal clergies become uselss and irrelevant. An educated and prosper population will not easily manipulated by clergies superstitious and outdated rhetorics.

The kleptomanic mullahs are fully aware of the consequences of allowing a middle class to emerge and prosper. They learned that by studying the Shah's mistake of allowing a middle class to flourish at his own peril. The middle class in Iran colluded with the clergies and overthrew the Shah. The mullahs are not going to repeat the Shah's mistake.

One reason is that Iran's government has discouraged the formation of an industrial middle class, said Abbas Milani, director of the Iranian studies program at Stanford University, who left Iran in 1987. That would leave 80 percent of the economy essentially in the hands of the state. As a result, there is no solid cadre of business leaders to pressure the government.

Despite its massive oil reserves, the country has very little capacity to produce substances like gasoline and jet fuel. He estimated Iran's imports in this area are at about $10 billion a year, a figure that may represent up to a third of all imports.


Parthian

This article lacks substance...

by Parthian on

The article, along with all the supportive commentaries it has received lack substance. It is become a tactic to frame any issues (especially those benefiting the regime) as something that will ultimately benefit the Iranian people, and might even led to regime change. This is an absurd assertion at best.

Fallacy 1 (Economic appeal): Free market forces will eventually open up the political process. This argument is wrong at many levels. First, let' assume there is free market in Iran; there is never been a scientific correlation made between free market and political reform. Indeed, take a look at China, there was a lot of hope that economic progress would lead to a more democratic China. Not only that has not happened, but Olympic organizers this past year admitted that in some instances HR situation is been getting worse. Why? Because countries such as China, and Iran who provide the world with an important commodity (Labor, and Oil respectively) even in free market are shielded from political forces that may accompany the free market forces.

Now, let's look at the alternative which is the reality in Iran, there is no free market in Iran, but it might eventually come as a result of lifting the sanctcions. Iran has been under sanction for the past 30 years to some extent, although the extent of these sanctions have been variable. In the last 30 years, the economic situation has consistenly deteriorated, and although, several privatization plans were drawn up, none of the governments(reformers, conservatives) have truly and genuinely implemented these plans. Deep down IR knows that free market would mean their down fall, understanding this important fact, they will not allow the free market to take hold. Just as democracy is only practiced among the oligarchy, free market is only practiced at that level, and not below. IR wants a dependent population, that is how governments seize power, and create influence. We don't need the lifting of sanctions to have internal free market.

Fallacy 2: Sanctions only hurt ordinary, and poor Iranians (emotional appeal). None sense. All the important economic leverages are in the hands of the oligarchy. There is absolutely no evidence that sanctions would open up more opportunities for the ordinary poor Iranians. Here is a good example: With Oil revenues above 100 billion dollars annually, some 35 billion dollars has gone missing (according to IR's own accounting). Even cash (the simplest of economic tools) has not trickled down. Iranians are poorer today than they were before the rapid rise of oil prices. As a matter of fact, Oligarchy has stolen more, invested more abroad i.e. in South Africa. What makes these folks so sure that lifting of sanctions wouldd somehow be allowed to trickle down to the most needy in Iran? If you believe in this, you have to believe in Reaganomics theory of trickle down. Absolutely nonsense!

Fallacy 3: sanctions give the regime excuse to blame foreigners (political appeal). So what people say here is that Iranian people are too stupid to recognize the real root cause of their problems. They know the system is rotten, the government is rotten, and run by a bunch of thieves, yet they would blame the U.S for their misery. I can see American goods being priced out of the market because of sanctions, how about the execution of teenagers? What does that have to do with sanctions? If Iranian people are too stupid to recognize the real root cause of their problems, American foreign policy should not change to correct that. American foreign policy, including its economic leverage is there to advance American interest, not to educate the Iranian masses.  


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Sanction be sanction, I'd say it again.

by Shadooneh (not verified) on

I agree with the author's main argument that sanctions are not hurting the regime but, contrary to the logic put forward by some career Iran-haters who push and/or support them, they help the mollahs' regime. I posted the following on another thread about the same subject. Thanks to copy-and-paste capability, I'm re-posting it.

Sanction be sanction
This may sound counter-intuitive to some, but I think the sanctions and all other ways of "containment", so loved by the neo-old-cons, have helped the regime in Iran rather than hurt it. The sanctions are being used as tools to limit the economic options for the Iranian people by concentrating almost all economic activities and the means to generate income necessary for making a living by the Iranian people in government's hands. No wonder the "Bazzariha", who enjoy economic clout and freedom from the government hand-outs, can go on strike and force the government to capitulate to their demands to rescind the VAT , but the ordinary workers such as the transportation workers and others, who are forced to go on peaceful strikes to make their miseries known, get the proverbial back rub by the police and sent to prisons bloodied, or to their homes with empty pockets and jobless.
If we want to see change in Iran, including regime change, we need to give the ordinary Iranian people economic clout by increasing non-government jobs in a free market economy. We can achieve this goal by encouraging domestic and foreign investments that create jobs. Let's remember the Javaher sellers and other bazaaries who do not provide vital goods nor basic necessities, unless you consider gold jewelry basic necessity, could have gone on striking for weeks without anyone missing a meal or a ride to work. So why did their "strike" work so well to the bazaaries advantage? The answer is because they have the necessary economic means to sustain their status and VAT was just an excuse for the bazaaries to prove a point. The fact the bazaaris could not be fired nor replaced by the government henchmen is another proof that the regime’s control over the workforce aided and abetted by the harmful sanctions courtesy of AIPAC and other neo-old-cons, not only do not hurt the regime but help to sustain it. I support anyone and any group who opposes the ill-conceived and counter-productive sanctions on Iran. Obama is making a grave mistake by supporting the illegal sanctions covering refined oil and other manufactured products. Those sanctions including the present ones are based on shaky legal ground mainly pushed by the enemies of Iran and will only give the regime more levers of oppression and continuity.

There are a couple of points that I don't agree with the author. One is the here idea that "Capitalism and globalization will replace the connections-heavy method of reaching the top...", in my humble opinion, doesn't jive with reality. I think you'd be less clear cut about that if you'd taken a trip to India! Also un-controlled un-regulated capitalism will lead to the mess the world is facing today with American people taking the brunt of it with the homes, jobs and livelihoods let alone the miseries heaped upon the less fortunate living in the Third-world counties. I'm more in favor of the Swedish model of hybrid Capitalism with proper regulation and safety net overseen by the government rather than the corporate Oligarchy that is ruining the US and the world economies. In other words socialism for the corporations and free enterprise for the masses have been a proven disaster.


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Bravo Roxanna

by Azam (not verified) on

Absolutely beautiful and very eloquent. It is refreshing to see a writer with such grasp of reality and what would work in the long run.

I am sick and tried of the people who just write to either bash Iran as nation, or just bullshit themselves with “her highness” comments or news.

If this writer is young, then I am grateful that the younger generation wants to come up with solutions rather than keep bring up what the problems are. If Roxanna belongs to the middle-age generation, then bravo for being progressive minded and not following the path of typical grumpy old wirers taking sides either with the very few Monarchists, or the pro Boys of the Republic.

Azam Nemati


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Please forget the MEK

by mobin (not verified) on

Dearest Roxanna,

Your view en description of the situation is very nice, but please, leave out this combination of M, E, and K...

Now let the backward socialists come with their quasi intellectual and ever disturbed way of denying that freemarket economics will do the the job in Iran.

By the way, I think you never should speak about a revolution. What's gonna happen looks more like an evolution... we indeed need some time, but I am sure that Iran will be the political, economic and cultural powerhouse of the Middle East in a few decennia. Indeed, moving the sanctions would lead to a opening of the flood gates of investment, tourism, and international media would overwhelm the Iranian regime's strategy of self-isolation and break the cleric-bazaari economic collusion. Though revolutions are the watched pot that never boils, they are more likely once the intelligentsia and masses can afford to think beyond basic welfare.

Globalisation alone has Iran's regime cornered.


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Pretty bold statements but

by Reader (not verified) on

Pretty bold statements but very accurate....it all makes sense after all....I wonder if you could get a copy of this mailed to the office of the new president (hopefully the smart one will soon be in the office)....


I Have a Crush on Alex Trebek

You just got yourself a spot on the terror watch list sister!

by I Have a Crush on Alex Trebek on

Great job. "I think the groups in Iran that are fighting for political and social rights are doing good, but their numbers are small"

You're right. It is connected to the fact that there is no incentive for people to put their asses on the line, except to get a shout out from Reza Pahlavi in a hotel conference room. Economic incentives work!