These sanctions were somehow in addition to the sanctions that the US government had previously imposed on Iran and the international companies that entered into transaction with Iran at amounts over 20m dollars.
At the same time, the international community did not have enough reasons to impose a full-fledged economic sanction against Iran, because on the one hand, the IAEA had reported that there were no signs of deviation of Iran’s nuclear activities towards production of nuclear weapons and on the other hand the world could not tolerate another oil rich country to be excluded from the international energy market at a time when the world was facing shortage of energy.
As a result, Iran had to either submit to the will of the international community or to carry on with what it believed was its undeniable right, i.e. access to peaceful nuclear energy; and Iran chose the second avenue.
Because of Iran’s familiarity with economic sanctions both at the time of Iran-Iraq war in 1980 to 1988 and later during the unilateral sanctions imposed by the US government, Iran attempted to make the best out of the economic sanctions which were aimed at urging other countries to stop trade and business with Iran.
As a result of the international sanctions, countries were less willing to carry out transactions with Iran or sign business deals with this country. Furthermore, many of Iranian banks were banned by the UN Security Council resolutions, therefore the cost of trade with Iran increased. Consequently, the prices of imported goods to Iran went up and some more sensitive items became scarce in Iran. Such developments increased the cost of living in Iran, which were hoped to encourage the Iranian government to reconsider its nuclear policies.
At the same time, the prices of oil in the international markets increased because of the fear of another war in the oil-rich Middle East. As a result, the extra costs that were imposed on Iran due to the sanctions were compensated by the extra oil revenues gained by Iran, and the Security Council’s policies in this respect were to a large extend neutralized.
On the other hand, because of the shortage of certain goods and higher prices of other commodities, Iran which had a strong industrial and agriculture foundation, started producing more goods and developing new technologies to meet its needs. In fact, the partial economic sanctions worked similar to a tariff barrier helping domestic producers and industries.
After a while as mentioned in the article, companies started to produce more goods. By the increase in production greater markets were needed, so the companies began exporting goods that were not even economical to produce for domestic use in the past. Consequently, Iran changed from a single-product economy into an exporting economy playing a role in the international economy. As a result, the economic sanction played the role of a double-edged sword. On the one hand, it increased the economic pressure on the people, but on the other helped Iranian producers and industries to flourish. For instance, Iran has now started exporting vehicles to Latin America and some central Asian countries competing with other countries in the same business. Iran is also exporting wheat, while it was one of the biggest importers of this produce in the past.
The challenge faced by the Iranian government is now how to better distribute wealth in the country, so that the burden of high prices on ordinary people due to economic sanctions can be alleviated. The laws in Iran encourage exports and therefore no taxes are levied on exported goods. As a result, the government should find ways and means to spread its social safety net using its increased oil revenues to cover those who are the most vulnerable and are affected by the high prices.
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