US Sanctions – A Privilege for Iran

It is amazing how self absorbed Americans really are. Anytime anything happens, American politicians quickly announce economic measures trying to persuade their voters that somehow such measures can squeeze some apparent international bogey man.

Yet, many nations (large and small) seem to get by very well without any direct economic ties with the US. One major example is Cuba, of course. A dire picture is painted within the US about Cuba’s economic condition, yet in so many ways Cuba seems to excel20internationally – with a healthy dose of Olympic medals and a universal health care system many in the United States envy. Clearly, US economic measures have not had any real impact on Cuba’s day to day life.

In some cases, such as Iran, it sanctions have actually been beneficial and a privilege to Iran. Iran really has no business doing business with the US. Consider the following:

1) Higher Shipping Costs: American products in all categories have higher shipping costs, versus Asian or European equivalent products. They are inherently more expensive. Any dependence on American goods will in the long run result in higher costs for Iranian buyers.

2) Confusing Standards: American products are generally designed for American markets to American standards. This implies American engineering standards involving English Units (pounds, feet, etc). On the other hand Asian and European products have now developed homogenized standards based on Metric Units. Iran would be a very confusing place, if American products had a high penetration of Iran’s markets.

3) Greater Global Competition: Sanctions with the US have resulted in Iranians shopping around for equivalent products in other markets. More often than not, it has meant hard work, but they have ultimately prevailed in procuring equivalent and competitive products. This in turn reduces any monopoly position American producers may have – and in the end results in lower prices and greater choice for buyers globally.

4) Domestic Production: In areas where alternative products could not be found, Iran has simply created domestic capability to produce them. Everything from parts for fighter aircraft, to components for chemical plants, pharmaceuticals, etc. which were once proprietary, have been copied and are being produced domestically.

5) Alternative Routing: There are over 400 companies in Dubai that specialize in procuring American goods for Iran’s market. They purchase products and trans-ship them to Iran very efficiently. Sanctions have in fact become meaningless, and any product that really has to be sourced in US (for whatever reason) does in the end make it to Iran’s market through these traders. So in fact, despite sanctions, Iranians do walk around with IPods, and hernia patches from US manufacturers.

6) Reduced Direct US Engagement: US sanctions have resulted in no direct sales contacts, no direct flights, and less Americans on Iranian streets. All trade is conducted through European subsidiaries or Traders in Dubai … which ultimately means less direct American influence in Iran. Americans have basically had to operate in Iran through their coward European proxies – the Brits, Germans etc. The Brits and Germans are wiser and shrewder…and ultimately serve their own interests before serving their American masters. They also operate on much longer term perspectives than Americans. This has resulted in a more stable Iran…the Mullahs have survived for 30 years unimpeded.

Iranians thus have access to everything American if they want it, but have enjoyed the benefits of alternative sourcing for their products…which has been beneficial to Iran.

US sanctions have become meaningless and a sham.

Before I sign off, let me just share one more thing. When Europeans threatened Russia with sanctions this past week (angered by Russia’s transgressions in Georgia), the Russians replied that they would stop exporting gas and other energy products to Western Europe (in retaliation). Yesterday, the Europeans backed off.

The truth is promoting economic sanctions is another way of publicly declaring political impotence. Sanctions have become meaningless.

Just ask Mr. Mugabe in Zimbabwe. He’ll tell you, as long as he has full control over the information ministry, the police and the military – his people will have to tolerate any and all sanctions (rampant 4000% inflation, unemployment, shortage of food supplies, no electricity….). If they march in the streets they will be killed. He has once again stolen an election and remained president for life. Sanctions have had no effect. They had no effect with South Africa. They had no effect in thwarting Saddam Hussein.

Can someone tell me where they did have an impact?