The dangers of US laxity in enforcing sanctions against Iran

The sanctions imposed by the Trump administration in late 2018 caused massive economic losses for the Iranian regime between 2019 and 2020. However, since President Joe Biden took over the presidency in early 2021, his administration has been rather lax in enforcing the sanctions on the ground. This laxity has enabled the Iranian regime to restore a significant part of its income through oil and petrochemical exports to the outside world.
Under the Biden administration, sanctions shifted from being a tool to modify the Iranian regime’s behavior regionally and internationally to a means of punishing the Iranian people rather than the regime. The Biden administration has also failed to prevent the flow of financial resources to the Iranian regime’s coffers.
Following the initial imposition of US sanctions on Iran’s oil and petrochemical sectors, Iranian economic growth plummeted, plunging the country into a two-year slump. Iran’s foreign trade also declined, losing half of its value. After the regime was able to take advantage of earnings of nearly $96 billion in 2017 (the year before the reimposition of US sanctions on Iran), the country’s exports to the rest of the world fell to $60 billion in 2019 and $50 billion in 2020.
Many governments and international companies, particularly those doing business in the US market, appreciated the seriousness of the Trump administration’s determination to impose sanctions and refrained completely from purchasing Iranian products. Western investors also withdrew from Iran, resulting in oil and non-oil trade with Europe — once one of Iran’s most important trading partners — completely coming to a halt.
Iran is still, nominally at least, subject to US sanctions to this day. However, even a cursory analysis of Iran’s oil and non-oil trade with the rest of the world shows that these sanctions now have little impact in comparison to when Donald Trump was in the White House. Analysis of Iran’s trade figures shows that, since Joe Biden became president, Iran’s trade with countries worldwide has returned to the levels seen in the pre-sanctions period, and even surpassed them.
In 2021, Iran’s non-oil trade totaled $103 billion and it is expected to exceed this figure by the end of 2022. This follows strong growth in Iran’s trade with China over the past two years. Similarly, Iran’s trade with its neighbors, primarily Iraq, the UAE, Turkey, the countries bordering the Caspian Sea and the Eurasian Economic Union countries, has also flourished. And Iran has restored trade ties with India and Europe, with which it had almost no ties two years ago.
Iran’s trade with EU countries has increased significantly recently, reaching €2.5 billion ($2.44 billion) in the first half of this year, a 34 percent year-on-year increase. During the same period, Iran conducted trade deals worth €1 billion with Germany alone, while the value of trade with India reached $2.3 billion and trade with the US reached $29 million, a 27 percent increase, in the first seven months of 2022.
Revenue from Iran’s non-oil trade also rose markedly, totaling more than $50 billion in the last six months, between April and September — a 13 percent increase on the previous year. This trade with Iran is worth $15 billion to China and $10.3 billion to the UAE. Iran’s gas exports, meanwhile, grew by 22 percent. Tehran has also increased its trade with Eurasian Economic Union member countries, reaching $1.3 billion in just four months (from April to August). During President Ebrahim Raisi’s reign, Iranian industrial product exports have increased by 70 percent.
All of the aforementioned indicators are positive signs for Iran’s regime, even while US sanctions remain in place.
This reinforces the notion that sanctions may be ineffective if seriousness is lacking. More dangerous than this is when sanctions deviate from their primary goal; shifting from a means of drying up the regime’s financial resources and modifying its malign regional behavior into a means of punishing the Iranian people, as is currently happening.
While the regime’s resources from oil sales are growing, its malign behavior domestically and regionally remains unchanged. Meanwhile, sanctions have crippled the lives of the Iranian people, with the government a few months ago shifting the burden of sanctions onto the people by eliminating food and medicine subsidies. Prices have risen to unprecedented levels, with the local currency losing 75 percent of its value against the dollar. This has resulted in the erosion of Iranian purchasing power, wages and savings, causing a plethora of internal disturbances.
Given that oil exports are the primary source of revenue for Iran, the Trump administration targeted them, causing their output to plummet to as low as 300,000 barrels per day, down from nearly 2 million before the sanctions were imposed. Iran’s oil exports have now surpassed their previous level of 1 million bpd. Not only that, but some countries’ imports of Iranian oil have increased since the sanctions were imposed. China alone purchased 900,000 bpd in August 2022, compared to 640,000 bpd in August 2018, prior to the imposition of US sanctions — an increase of about 40 percent.

These sanctions now have little impact in comparison to when Donald Trump was in the White House.

Dr. Mohammed Al-Sulami

The US can rapidly impose controls and sanctions on Iran or equally rapidly lift them. The results of such measures are usually quickly seen. The recent American reaction to the stalled nuclear talks is a case in point, with the US Department of Treasury tightening its grip on Iranian oil exports in September, imposing sanctions on two major Chinese companies for transferring and storing Iranian oil and petrochemicals.
Washington has also warned that more sanctions will be imposed on foreign companies, with the goal of putting more economic pressure on Tehran. This measure had an immediate impact, as Iran’s daily oil exports fell to an average of 1 million bpd in September, down from 1.4 million in August, a drop of a third in a month. China’s purchases of Iranian oil fell by 44 percent in the same period. It is also worth noting that China has spent $38 billion on Iranian oil products since January 2021 — that is, since the current US administration took office.

• Dr. Mohammed Al-Sulami is president of the International Institute for Iranian Studies (Rasanah). Twitter: @mohalsulami