THE HILL | BY DAVID ADESNIK AND SAEED GHASSEMINEJAD | November 30, 2019
Iranians have poured into the streets in over 100 cities to vent their anger at the deprivation that is now part of their daily lives. Even though harsh American sanctions have inflicted substantial damage on Iran’s economy, protesters are directing their anger at their own government, not at Washington. This might seem puzzling, since foreign correspondents in Tehran have consistently warned that Iranians are nationalists who would unite behind their government in the face of American pressure.
This expectation reflects the tendency of Western correspondents to present the hardships they witness as the result of sanctions, despite substantial evidence that corruption and mismanagement bear much greater responsibility. The American media’s coverage of pharmaceutical shortages in Iran illustrates this trend.
Saeed Namaki, the Iranian minister of health, warned lawmakers that corrupt networks are selling drugs on the black market, “hoarding medicines in warehouses, and distributing counterfeit drugs.” Despite sanctions, however, Iran has “no major problem” procuring medicines from abroad, Namaki reported.
U.S. media coverage is directly at odds with Namaki’s assessment. ABC, CBS, CNN, the Associated Press, and The Washington Post have all reported that U.S. sanctions are responsible for dangerous shortages in Iran, even though humanitarian goods, including food and medicine, are clearly exempt under U.S. law.
Reportedly, sanctions have a “chilling effect” that scares exporters away from doing legitimate business because they are so afraid of unintentionally violating sanctions. Human Rights Watch published a 40-page report in late October that purported to document this chilling effect.
The evidence tells a different story, however. European Union data show that pharmaceutical exports from the EU to Iran actually rose slightly during the first half of 2019 compared to the same period last year. Since the U.S. reinstated most sanctions in November 2018, this data provides a reasonable before-and-after comparison.
Pharmaceutical imports to Iran from the EU had a value of €320 million in the first six months of 2019, up from €312 million in the first half of 2018. The physical volume of imports also remained stable. Chinese customs data likewise show that Iranian pharmaceutical imports increased from $48.1 million in the first three quarters of 2018 to $59.5 million in the same interval this year.
Iran stopped publishing detailed trade statistics over the last few months, so there is no way to know if Tehran’s import figures match the export numbers from Brussels and Beijing.
A full assessment of the impact of sanctions would require substantially more data than is now available, yet the figures we have suggest Iran can purchase what it wants. The question to ask is why Iran does not spend more on such imports if consumers are complaining about shortages. Instead of bankrolling Hezbollah, Hamas, and Bashar al-Assad, why not buy more pharmaceuticals? According to the IMF, Iran still has currency reserves of roughly $85 billion.
Candid observations by Iranian health ministers have often undermined both regime propaganda and Western media coverage that attributes shortages to sanctions. In 2012, Health Minister Marzieh Vahid Dastjerdi – both a gynecologist and the first woman to hold a ministerial post in the Islamic Republic – said on state television, “I have heard that luxury cars have been imported with subsidized dollars but I don’t know what happened to the dollars that were supposed to be allocated for importing medicine.” She was promptly fired.
President Hassan Rouhani’s first health minister, Ghazizadeh Hashemi, once commented, “the problems that we have in the field of pharmaceutical products have been created by ourselves inside the country and the medicine problem has nothing to do with the sanctions.” Yet these kinds of comments tend not to make headlines in the West. As a result, pressure builds on Washington to widen humanitarian channels, which Iran has exploited to siphon billions of dollars from accounts intended for the purchase of food, medicine, and other necessities. For example, in May 2013, Iran’s Bank Pasargad purchased nearly 5.2 tons of sugar at the extraordinary price of $240 per pound. This ruse gave Iran access to funding held in a humanitarian escrow account, which the vendor recycled back to the clerical regime.
Human Rights Watch now advocates a relaxation of the sanctions that prevent the Central Bank of Iran from financing the import of medicine and other humanitarian goods. Yet the organization’s report predictably fails to mention that the Treasury Department sanctioned the Central Bank, along with its chairman and other senior officials, for directing the illicit transfer of tens of millions of dollars to Hamas and Hezbollah.
Treasury has also devised an innovative means of defusing claims that sanctions have a chilling effect on humanitarian trade. In late October, it announced a new mechanism whereby companies can seek written confirmation that they will not be exposed to sanctions, provided they file detailed monthly reports on their business in Iran. HRW dismissed the new procedure as “burdensome,” yet it is basically blind to the need for safeguards, given how Iran’s principal exporter of terrorism, the Islamic Revolutionary Guards Corps, has conscripted the country’s financial institutions into its service.
This is not the first time that superficial press coverage has lent credibility to Iranian talking points about the negative impact of sanctions. The same dynamic prevailed in the years prior to the 2015 nuclear deal. Iranian leaders understand that Americans have sincere humanitarian concerns that Tehran can manipulate to undermine Washington’s resolve. The clerical regime has no such scruples, as its enabling of Assad’s atrocities makes clear.
The Iranian people clearly see through such ruses. The best way for the U.S. government to support them is not to ease sanctions, but to maintain maximum pressure until the regime stops abusing its people, abandons its nuclear ambitions, and ends its pursuit of regional domination.
David Adesnik is director of research at the Foundation for Defense of Democracies (@FDD), where Saeed Ghasseminejad is a senior Iran and financial economics advisor. Follow them on Twitter @adesnik and @SGhasseminejad. FDD is a nonprofit, nonpartisan 501(c)(3) research institute focusing on foreign policy and national security. FDD does not accept donations from foreign governments.
