Please allow me to make a couple of possibly radical points, and then explain myself.
First, sanctions help the Iranian government.
Second, removing sanctions against Iran will actually be a more powerful tool to creating an internationally-friendly Iran.
Essentially the purpose of sanctions is economic isolation. That step seems to work. But proponents of sanctions think that economic isolation leads to governmental weakness. But we don’t see this happening in Iran. Why not?
Generally speaking in Iran today, we have two very identifiable camps: religious poor and connections-heavy elite. I call the elite “connections-heavy” because Iran lacks a solid rule of law, and therefore, many individuals who reach economic success in Iran do so through their connections. What this means therefore, is that the rich/elite in Iran usually achieve these positions not through a level playing field, but through individual connections and power. So, we’ve got those two camps. But do we have a camp that is in the middle ground? No.
What Iran lacks is a solid middle class. How does this relate to sanctions?
Well, sanctions prevent the growth of a middle class. Blocking Iran from the international economic community means fewer jobs, fewer opportunities, etc.
The elite rich can afford to ignore sanctions, buying what they want at the Dubai-marked up prices. When you can pay your way out of sanctions, what does this mean? No INCENTIVE to alter the status quo.
The religious poor can barely afford a thing, so government handouts and sympathy keep them going. When you’re too busy trying to live on a month-to-month or day-to-day basis, what does this mean? No TIME to alter the status quo.
And what does this mean for the Iranian government? Well, with the elite/rich busy shopping in Shahrake Gharb and placing orders for hot items from Dubai, and with the religious poor struggling to survive, that’s right, no one comes knocking on the government’s door demanding much of anything. This is exactly why and how sanctions actually HELP the Iranian government maintain its power.
So, that was first, sanctions help the Iranian government. Now let me explain why removing sanctions will create a more internationally-friendly Iran.
We’ve seen that the two predominant camps in Iran don’t actually have a strong incentive lobby the government for change. And sanctions certainly do isolate Iran economically, but with the ironic effect of actually preventing the emergence of a middle class.
You might think, well wait a minute, if sanctions are removed, then those elite/rich will just gobble up the opportunities and everything will be just as it was before. But that is not the case. The international economic system, which Iran is currently left out of, is based on two drivers: capitalism and globalization. When these two forces enter a new environment, they enter with such force, overwhelming everything in their path, that even a dominant elite can’t hoard all the opportunities (who hasn’t noticed the invasion of Nokia, Toshiba, etc. billboards all over Tehran?!). In fact, it’s this very power that has made so many people speak out against the negative effects of capitalism and globalization. But in Iran, we need these effects of capitalism and globalization to provide a level playing field and change the connections-heavy method of doing business in Iran.
Capitalism and globalization will replace the connections-heavy method of reaching the top with an innovation and entrepreneurial-heavy method of reaching the top. What does that mean? If you have a new business idea, capitalism is there for you, you don’t need connections. If you have a new invention, capitalism is there for you, you don’t need connections. If you and your brother want to start up a new bakery business shipping delicious “gaz” from Esfahan to Tabriz, capitalism is there for you, you don’t need connections. What does this mean? You guessed it, the emergence of A MIDDLE CLASS.
So how does a middle class make Iran more internationally-friendly? Many scholars have argued that Gorbachev’s fatal mistake was that he first gave the Soviet people a little taste of political freedom, before he had set any economic reforms in place. The result? A failure. But when Soviet leaders got serious about economic reforms, letting the Soviet Union participate in the international economic system, that was the powerful driver that led the people to demand more, opened the floodgates to the insatiable appetite of capitalism, allowed the emergence of a middle class, and ultimately changed the history books from “USSR” to “Russia”.
It’s no wonder that since 1991, we’ve seen an absolute explosion in Russia’s middle class. Yes, there are still oligarchs out there, who hoard the opportunities for themselves, and scandals such as Yukos taught us that we haven’t quite reached a level playing field in Russia. This only teaches us that capitalism needs the rule of law to develop properly. But Russia is only in the early stages of capitalism, compared to the robust over 200-year-old tradition of capitalism we see in the United States. All in all, creating a middle class is the first step. It’s no coincidence that the Cold War died down as Russia became more economically open.
The only difference between that analogy and Iran is that the Soviet Union chose to dissociate itself from the international economic system, while Iran is forcibly left out of the international system because of sanctions.
When a country is allowed to participate in the international economic system, a middle class emerges. This middle class has the incentive to demand more international-friendly behavior from its government. Right now, the Iranian government can afford to use off-putting language that makes corporate CEOs shudder, precisely because there is no predominant group in Iran that would resist such behavior. But if average Iranians had their livelihoods tied into the international economic system, there would finally be the incentive coming from WITHIN Iran to rein in the government. As we have seen throughout modern history, over time, capitalism eats away at the power of national governments. Removing sanctions would allow a middle class to emerge in Iran, and this middle class would be the source of change in the Iranian government (remember how important bazaari-s were in the time of the shah?).
Now don’t get me wrong, I think the groups in Iran that are fighting for political and social rights are doing good, but their numbers are small. Also, it is far easier for mis-interpreters of Islam to use the religion to counter political and social freedom than to counter economic freedom (if I recall correctly, the prophet’s wife was quite wealthy!).
What Iran fundamentally lacks and fundamentally needs is a robust, capitalism-based middle class. Removing sanctions is the first way to encourage the growth of a middle class. After that, all we need is time. A revolution in Iran can occur, without overthrows, without violence, without needless confusion and chaos. It will be an economic revolution. Just let capitalism in to do its magic. Even MEK supporters should find this logic convincing. They claim to be the ones who want the overthrow of the current government more than anyone (dubious, but let’s just give them the benefit of the doubt for argument’s sake). If you really REALLY want the Iranian government to weaken and become a participant in the international order, there is no force stronger, not missiles, not rockets, not even nuclear weapons, than capitalism.
This interpretation of the role of sanctions leaves a lingering question. In the face of economic data and evidence showing the correlation between economic openness and political freedom, how could the United States, Israel and other countries be so hungry for more and more sanctions against Iran?
Unfortunately, the answer to this question seems to be a bit uglier. If sanctions are removed and things progress as the economists expect and as I have explained above, then Iran stands to become within a couple of decades, a new economic powerhouse and international friend in the Middle East. Unfortunately, some governments in the Middle East see the game as zero-sum and don’t see the pie that can be enlarged for everyone. For a small country like Israel, an Iran that is the new economic girl-next-door, may leave Israel feeling like a slightly overweight girl at band practice.
