By Sarah Catherine Niemann
Background: U.S Iranian Relations Concerning Oil Sanctions
On January 16, 2016 the Joint Comprehensive Plan of Action was implemented triggering the removal of crippling U.S, E.U, and UN sanctions on Iran’s economy that were restricting Iran’s oil exports, in return for the termination of Iran’s nuclear program. Oil is the main driver of Iran’s economy making up 80% of Iran’s export earnings. (EIA 2020) In 2011 Iran exported 2.5 million barrels of oil per day. Iran’s economy was drastically improving with the implementation of the JCPOA.
Source: U.S. Energy Information Agency
On May 8, 2018, President Donald Trump announced that the U.S would be pulling out of the JCPOA agreement. Following that decision, the U.S has implemented more economic sanctions on Iran’s oil exporting industry, aiming to cut Iran’s oil exports to virtually zero. (Al Jazeera 2019) Following these sanctions, Iran’s economy has suffered greatly, including mass job loss, public protests, and widespread concern in the international community about the conflict between Iran and the U.S. (Goodman 2020) Before the Trump presidency, Iran was slowly increasing oil production in order to increase economic outputs again and better the lives of Iranian citizens. However, as shown in the chart to the left, a negative market shock forced Iran’s oil production to drastically slow.
Tensions between the U.S and Iran escalated further when the U.S ordered an air raid assisination of one of Iran’s top military leaders Qassem Soleimani on January 3, 2020. This led to even greater tensions between the U.S and Iran, with correspondingly greater social unrest, unemployment, and inflation in Iran (now up to 40%). According to the IMF, Iran’s economy is contracting at a rate of 9.5 annually. (Goodman 2020) As the international community watched the tensions between the U.S and Iran escalate there was widespread concern. The U.S’s ultimate goal should be to avoid a potential armed conflict with Iran and to avoid a possible counter-attack that could be in the form of illegal nuclear weapon use on the part of Iran.
Source: United Nations Conference on Trade and Development
Before addressing peace between the two nations the U.S must first address the issue that the U.S does not formally recognize that these social and economic issues are caused by U.S sanctions. The U.S requests that Iran come to the table for peace negotiations and for them to remain peaceful in the face of social and economic turmoil. In short, the U.S is making high demands from Iran while conceding nothing. In order to schedule a productive negotiation meeting between the U.S and Iran and hopefully resolve this dire situation, the US should adopt the following policies. First, the U.S must offer to lift economic sanctions equivalent to letting Iran export 500,000 barrels of oil per day to China and other oil purchasing states. Iran will not export as much as they did in their peak oil exporting years but it will be enough to jumpstart their economy and defuse protests that are causing social and economic unrest for the people of Iran. The removal of some sanctions will help the citizens of Iran more than it will help the countries high ranking political leaders because it will help industry try to return to how it was in the early 2000’s. The removal of sanctions is also an offer of goodwill from the U.S that will hopefully defuse tensions between the two nations’ leaders. Additionally, since re-implementation of sanctions in 2018 by the U.S Iran has still exported oil to China and other states through illegal channels. (Singhvi, Anjali, Wong, and Lu 2019) Offering the removal of sanctions therefore won’t drastically change the world economy because Iran will now be able to export oil legally instead of through illegal means. In return for this amount of sanctions being lifted, Iran would have to come to the table for negotiations with the U.S and other P-5 nations and be willing to renegotiate the JCPOA. The U.S’s ultimate goal is to prevent a war with Iran and protect the citizens of Iran because a war would be costly for both nations monetarily and in terms of loss of life.
Conclusion and Counterarguments
There would be domestic opposition to this policy prescription because Iran is not a U.S ally and the two have had tense relations for years. Some may argue, why should the U.S care if Iran’s economy suffers? In response, the U.S. should care about stabilizing Iran’s economy in order to reduce the likelihood of Iranian military retaliation against the U.S, which could possibly include nuclear weapon use. Also, the U.S has made a commitment to honor the UN Declaration of Human Rights, and the current situation in Iran has the potential to have extreme human rights abuses against the Iranian people by the Supreme Leaders of Iran if some economic sanctions are not lifted soon. (Iran HRM 2019)
Considering that regime change in Iran is a possibly violent and unproductive solution, the short term the removal of sanctions, in order to create temporary peace, is favorable. A de-escalation of the violence the country is experiencing between its government and citizens is more pertinent than a regime change that would cause more violence among the country’s population. As a long term goal, regime change is ultimately what the U.S wants for the Iranian people. However, the U.S’s ultimate goal is to prevent escalation in the country, protect its own interest in the region, and prevent violence against the citizens of Iran, and this can be achieved first by the removal of sanctions that will allow for temporary economic survival.
Goodman, Peter. 2020. “Iran’s Grim Economy Limits Its Willingness to Confront the U.S.” The New York Times.
“Iran Human Rights Monitor, 2019 Annual Report.” Iran HRM. 2020.
“Iran to Sell Oil in ‘Grey Market’ as US Tightens Sanctions.” Al Jazeera. 2019.
Singhvi, Anjali, Edward Wong and Denise Lu. 2019. “Defying U.S. Sanctions, China and Others Take Oil From 12 Iranian Tankers.” The New York Times.
“Sanctions reduced Iran’s oil exports and revenues in 2012” U.S. Energy Information Administration (EIA). 2020.
“U.S.-Iran Relations.” CQ Press. 2020.
Also published on Medium.