Iran is one of the hardest hit countries by the coronavirus pandemic, with a total of 62,589 confirmed cases and 3,872 deaths as on 8 April 2020
. A quick tally reveals that it has the 7th
highest number of confirmed cases, and the 6th
highest number of COVID19 related fatalities. The contagion was first detected on 19 February 2020
in the holy city of Qom, and thereafter spread quickly to the country’s 31 provinces. The virus has indiscriminately attacked the public and the upper echelons of the Iranian government, including members of the parliament, religious leaders and senior ministers.
The Iranian government has been criticised for its botched response
to the coronavirus crisis, where its politicised health policy entailed denial and misinformation as a preferred response to the unfolding crisis. However, more than the inaction of the government, questions have been raised regarding the role of US sanctions in crippling Iran’s economy, infrastructure and public health facilities. These factors combined have severely incapacitated Tehran from providing the best response to the pandemic.
Resultantly, the European Union, US Congress members, rights groups and the Iranian government have appealed to the US government to suspend sanctions for this duration. Allies like Russia — a country that is also facing sanctions for its 2014 annexation of Crimea — called for a joint moratorium
on sanctions affecting essential goods and financial transactions, and stressed the need to establish “green corridors free of trade wars and sanctions” to supply medication, food, equipment and technology.
Sanctions were first imposed after the 1979 Tehran hostage crisis, and gradually expanded under a multilateral sanctions regime to combat Iran’s controversial nuclear programme. These sanctions were put on hold when the Obama administration entered into the Joint Comprehensive Plan of Action (JCPOA) in 2015 — a historic agreement under which Iran agreed to meet specified nuclear disarmament targets in return for lifting sanctions against it.
Iran has been under US sanctions for around four decades. Sanctions were first imposed after the 1979 Tehran hostage crisis, and gradually expanded under a multilateral sanctions regime to combat Iran’s controversial nuclear programme. These sanctions were put on hold when the Obama administration entered into the Joint Comprehensive Plan of Action (JCPOA) in 2015 — a historic agreement under which Iran agreed to meet specified nuclear disarmament targets in return for lifting sanctions against it. However, with President Trump’s withdrawal from the JCPOA, sanctions were re-imposed by November 2018 and are now proving fatal to Iran’s fight against the COVID19 pandemic.
The US administration has adopted the strategy of “maximum pressure
” on Iran, by imposing sanctions on its energy, shipping and financial sector until the government stops funding terrorist activities and nuclear weapons development. US sanctions are enforced through a wide array
of instruments that includes 11 statutes, 25 executive orders and 4 federal regulations. Certain categories of sanctions, such as those on banking, finance and shipping have directly caused shortages of medical equipment and created an overall negative impact on Iran’s health sector.
Financial sanctions, for instance, prohibit US banks from transacting with Iran, which in turn, limits its access to dollar denominated transactions. Additionally, the sanctions block Tehran’s access to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) — a global banking messaging system that facilitates international financial transactions. Lastly, secondary sanctions measures target non-US entities that conduct financial or commercial transactions with Iran, and are thus, at risk of facing prosecution in the US. The sanctions make transactions with Iran lengthy, complex and even impossible, in some cases. Further, the added legal, financial and administrative costs for businesses and financial institutions leads to excessive caution or over-compliance
, and effectively deters them from entering into transactions with Iran.
To be sure, sanctions instruments have a built-in exception
for humanitarian assistance, including transactions for sale of agricultural commodities, food, medicine and agricultural services. Despite this exemption, sanctions have severely impaired the country’s ability to finance humanitarian imports. Businesses and financial institutions consider it a significant risk to transact with Iran, even if it is for exempted categories like essential medicines and medical equipment to Iran.
There has been a significant decline in the number of license applications sent to the OFAC, from 220 in 2016 to 36 in 2019. This indicates how US sanctions can deter companies from entering into transactions with Iran.
The exemptions themselves are regulated through a complex export control regulatory process. Trade in humanitarian goods are subject to two categories
of licensing requirements. The general license category includes most medicines and is easier to export, while the specific export license category is harder to export, and increases compliance costs for companies and institutions. The latter category includes medical supplies, instruments, equipment, equipped ambulances, institutional washing machines for sterilisation, and vehicles carrying medical testing equipment. The rationale for this classification — and hence, stricter regulation — is to prevent the misuse of dual use chemicals and equipment.
As per data from the US Office of Foreign Assets Control (OFAC) — an agency responsible for enforcing sanctions — the US administration approved only 14% of license applications
for humanitarian goods in 2017 and 2018, out of which only 11% applications for medical devices were approved. Further there has been a significant decline in the number of license applications sent to the OFAC, from 220 in 2016 to 36 in 2019. This indicates how US sanctions can deter companies from entering into transactions with Iran.
US sanctions have also adversely impacted Iran’s economy, which directly affects its ability to purchase medicines and medical equipment. Following Trump’s withdrawal from the JCPOA, the rial depreciated sharply
by 172%, and rose to over 100,000 rials per dollar. As an economy that is highly dependent on the hydrocarbon sector, its oil exports have been slashed by more than 80%
leading to a significant loss of revenue and foreign exchange earnings. Moreover, according to IMF
, Iran’s GDP growth has also contracted by an estimated 4.8% in 2018, and is forecast to shrink by 9.5% by 2019. Volatility in exchange rate, high inflation and an ongoing recession
, has made it difficult for Iran to purchase humanitarian goods, food and medicine.
This is not the first and only case of how sanctions can have a grave humanitarian impact. In August 1990, sanctions were imposed on Ba’athist Iraq following its invasion of Kuwait. Medical professionals and policy researchers have pointed out the devastating effect of sanctions across different health parameters — with one stating that there have been more sanctions related death
than casualties in the US-Iraq War. Health facilities, infrastructure and public services also deteriorated due to sanctions on Iraq, and disproportionately impacted
the health of children, women and adolescents.
This is not the first and only case of how sanctions can have a grave humanitarian impact.
Cuba is also subject to a comprehensive US embargo since 1961, with sanctions instruments containing the usual exceptions for humanitarian goods. The 1992 Cuban Democracy Act, however, modified this exception and does not permit sale of food and requires an “on-site” verification
for sale of medical supplies. Additionally, the US has applied pressure on other countries to stop trading or providing humanitarian goods to Cuba, which resulted in high costs and shipping charges for fear of facing possible US economic sanctions. The impact
of US sanctions was felt in a multitude of areas, such as nutrition, health infrastructure, medical outcomes, availability of medicine and medical products, and a rise in mortality and morbidity in specific age groups, such as the elderly.
The US has, of course, launched a strong counter-narrative claiming
that it is not sanctions, but Iran’s own mismanagement of resources and disinformation campaign that has exacerbated the crisis. This view has also been endorsed by analysts, who argue
that sanctions should not be lifted for regimes like Iran, which are responsible for diverting funds from the Iranian people to finance terrorism, human rights abuses and nuclear activities.
It is true that political instability, corruption and economic mismanagement in Tehran have aggravated the issue; and likewise, this calls for governance reforms and financial transparency initiatives in Iran. But this is not the sole reason
for the scarcity of medical equipment and the condition of health infrastructure in the country today. Sanctions remain a central impediment to improving Iran’s capacity to respond to the pandemic.
Time and again, the devastating and far-reaching impact of sanctions has been discussed. Its crippling effect on a nation’s economy, its people and their access to healthcare, has been criticised. Sanctions are an important alternative to aggressive policies like war; but there are suggestions to restructure them and switch to targeted and “smart” sanctions which limit adverse humanitarian consequences.
The Trump administration has not made any commitment to lift sanctions measures on Iran. In the unlikely event that it does, it will still be difficult for Tehran to undo decades of sustained damage to its health infrastructure, and respond to the situation at hand in a timely manner. Nonetheless, sanctions relief will provide some respite to Iran and give it some much-needed fiscal and monetary space to launch policies to combat COVID19. This is a test for the American and global leadership to recognise the need for the international community to stand together and fight against the pandemic. The lifting of Iran sanctions will not simply be an important humanitarian and goodwill gesture; it has the power and potential to enable the Iranian government and its people to weather this storm.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.