Sanctions relief: Benefiting Iran’s elite or people?

A majority of Iranian people were hoping that economic sanctions relief would alleviate their suffering, improve their standards of living, and push many families above the poverty line. Almost a year has passed since the Iranian government has been receiving sanctions relief.

Nevertheless, some Iranian civilians began to believe that even economic sanctions relief, or the lifting of whole economic sanctions from the Iranian government, are not going to assist the civilians, their financial day-to-day activities, or bring concrete changes on the ground.

Without a doubt, sanctions on regimes do take a toll on human life. As history has shown, when Iraq was under economic sanctions, the suffering of civilians dramatically increased. The level of poverty and lack of access to medical treatments increased.

Similarly, in Iran, the economic sanctions accompanied with economic mismanagement of the government, high level corruption, lack of a robust private market, and a state-controlled economy have pushed the middle class towards poverty. The percentage of Iranian families living under the line of poverty has increased to 40 percent.

Several Iranian people, some of whom who have lost hope in changes from the sanctions relief, are speaking up. Nastaran, an English teacher in the suburbs of Tehran said to me: “We have yet to see any benefits from these sanctions reliefs. We hear that the government has been receiving billions of dollars every month and it has increased its export. But where is the money going? Is it most likely ending up in the hands of the top few.”

Stock Market

After the interim nuclear deal and extension of the negotiations between the six world powers (known as the P5+1: China, France, Germany, Russia, the United Kingdom, and the United States) and the Islamic Republic, the Iranian government received an estimated $7 billion. Iran continues to receive approximately $700 million every month under the extension deal.

In addition, there has been some sanction suspensions with respects to some of Iran’s major industries, including Iran’s auto sector, gold and precious metals, and petrochemical exports. The Iranian currency, Rial, has appreciated due to the sanction reliefs, Iran’s oil and non-oil exports have increased, its economy has witnessed signs of stabilization, Tehran’s Stock Exchange has soared and Iran’s exports and business dealings with several countries have ratcheted up.

The suspension of sanctions has definitely given both psychological and financial support to the Iranian government. But the real question is how this money is being spent and which institution primarily benefits from this sanctions relief? Are ordinary people benefiting from this flow of money?

Iran’s military-industrial complex

Four major institutions are mostly benefiting from the economic sanction reliefs: Iran’s military-industrial complex, the Office of the Supreme Leader Ayatollah Ali Khamenei, a few top business figures who are connected with the government and the Iranian Revolutionary Guards’ Corps (IRGC), through either legal and illegal imports and exports.

For example, the IRGC controls and owns a considerable amount of shares in the aforementioned industries which have witness sanction reliefs. In the petrochemical industry, the IRGC military-industrial complex owns Zagros Petrochemicals, 40% of Pars Petrochemical Company, part of Arak Petrochemicals and Khark Petrochemicals 25% of Kermanshah Petrochemicals, as well as 19% of shares of Maroun Petrochemicals.

In addition, the IRGC owns 80.18% of the giant Ghadir Investment Company. In that respect, the major beneficiaries are not ordinary Iranian people but the senior cadre of the IRGC whose shares’ value have soared due to the sanctions relief, extension of the nuclear deal and the Joint Plan of Action (JPA) which was signed on November 24 between the six world powers and Iran.

This phenomenon of the monopolization of the economy applies in other sectors of Iran’s economy as well. When it comes to Iran’s economic system, the supreme leader and IRGC do have considerable amount of control and shares in almost all industries including financial Institutions and banks, transportation, automobile manufacturing, mining, commerce, and oil and gas sectors.

As a result, these types of sanction reliefs will mostly benefit the ruling elite, primarily the supreme leader and Iran’s military-industrial complex, IRGC. Iranian people will hardly observe any benefits from these economic sanction reliefs or lifting of economic sanctions.

It appears that the easing of sanctions are strengthening the ruling elite without any sign of redistribution of wealth. This is predominantly due to the fact that Iran’s economic system is a state and military controlled system, it lacks transparency, and is crippled with widespread corruption by the ruling elite and few on top.

If the intention of economic sanction relief is to assist the Iranian people and alleviate their suffering, there ought to be more efficient approaches to develop some type of targeted sanction reliefs (for example being directed at Iran’s educational system health care, etc) which aim at empowering Iranian civilians and primarily the middle class.

______________________

Majid Rafizadeh, an Iranian-American political scientist and scholar at Harvard University, is president of the International American Council and he serves on the board of Harvard International Review at Harvard University. Rafizadeh served as a senior fellow at Nonviolence International Organization based in Washington DC. He is also a member of the Gulf project at Columbia University and Harvard scholar. He is originally from the Islamic Republic of Iran and Syria. He has been a recipient of several scholarships and fellowship including from Oxford University, Annenberg University, University of California Santa Barbara, and Fulbright Teaching program. He served as ambassador for the National Iranian-American Council based in Washington DC, conducted research at Woodrow Wilson International Center for Scholars, and taught at University of California Santa Barbara through Fulbright Teaching Scholarship. He can be reached at [email protected]