In a tit-for-tat move, Iran sanctioned five U.S. companies and seven individuals last week, accusing them of fueling terrorism in the Middle East.
This largely symbolic announcement served as retaliation against last month’s new batch of U.S. sanctions targeting Iranian cybersecurity and drone industries.
The U.S. levels similar accusations against Iran, claiming Tehran supports terrorist groups in the region.
Both nations hold significant sway in the Middle East and align with opposing factions in the Israel-Hamas war.
“Sanctions from Iran carry little to no weight,” Pedro Labayen Herrera, a research assistant at the Center for Economic and Policy Research, told VOA.
He said as the world's largest economy, the United States, holds far more sway over the global financial system.
“The U.S. dollar, an international reserve currency central to global trade and investment, is what gives its sanctions so much power,” said Herrera. “In contrast, the Iranian rial has little value outside Iran, so sanctions issued by Iran have a negligible effect.”
While sanctions have harmed Iran's economy, experts debate their effectiveness in achieving U.S. strategic objectives.
“Sanctions have certainly impacted Iran's economy adversely driving inflation up and adding pressure on the government through maximum economic pressure, which is in line with U.S. objectives,” Merissa Khurma, director of the Middle East program at the Wilson Center, told VOA.
But some analysts like Ali Vaez, director of Iran Project at the International Crisis Group, argue that sanctions imposed on Iran have largely failed to achieve their goals of stopping its nuclear program, ending its alleged support for terrorism, and improving human rights.
“Iran is more aggressive in the region, more repressive at home, and closer to the verge of nuclear weapons than ever before,” Vaez told VOA.
Regime change?
Since the Islamic Republic's establishment in 1979, the U.S. has imposed a multitude of sanctions under successive administrations.
“Before Russia's war of aggression against Ukraine, Iran was the most sanctioned country by the U.S.,” said Mahdi Ghodsi, a lecturer at the Vienna Institute for International Economic Studies.
The sanctions target Iran’s Supreme Leader Ali Khamenei and anyone appointed by him “potentially sanctioning Iran's public and semi-public sectors, which account for 70-80% of Iran's GDP,” Ghodsi told VOA.
U.S. officials under the Biden administration have said Tehran must come into compliance on any number of issues outlined in the sanctions regime before it would consider dialing sanctions back.
Experts, however, say it is unlikely the U.S. will lift sanctions on Iran in the near future.
“Sanctions have turned into a one-way ratchet that could only be lifted if the targeted regime is no longer in place,” said Vaez.
He saif attempts to achieve regime change through sanctions have historically proven ineffective elsewhere in the world.
China benefits
Despite mixed results from sanctions, some U.S. officials maintain that tightening them further would yield the desired outcomes.
U.S. Treasury Secretary Janet Yellen said last month Washington is trying to further diminish Iran’s oil exports.
“There may be more that we could do,” Yellen told reporters last month.
However, the sanctions have consequences beyond Iran.
U.S. sanctions targeting Iran’s oil exports affect global energy markets.
Unwittingly, the sanctions appear to benefit U.S. archrival China, which buys Iranian oil at a highly discounted price.
Iran's oil revenue remains crucial for its economy.
After a slump in exports caused by tightened U.S. sanctions under the Trump administration, Iran has seen a significant rise in oil exports, surpassing $26 billion in the first three quarters of 2023, according to Iranian officials.
