Do Sanctions Really Work?

Foreign leaders are gathered in Geneva, trying to come up with a plan to ease sanctions on Iran, in exchange for promises about their nuclear program. Guest host Celeste Headlee asks NPR's Tom Gjelten about when sanctions work, and why they sometimes don't.

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CELESTE HEADLEE, HOST:

This is TELL ME MORE from NPR News. I'm Celeste Headlee. Michel Martin is away. Coming up, we visit the Barbershop and ask the guys to reflect on the 50th anniversary of JFK's assassination in Dallas. That's in just a few minutes.

First, though, diplomats from around the world are gathered in Geneva right now to talk about Iran's nuclear program. They're trying to reach a deal that would stop Iran from taking steps that could lead to a nuclear weapon. And in exchange, the global community would ease long-standing sanctions against that country. And that got us thinking about sanctions - why they work sometimes in some countries, and why they sometimes don't have much effect. So we're joined now by NPR's Tom Gjelten here in our Washington studio. Welcome back as always, Tom.

TOM GJELTEN, BYLINE: Hi, Celeste.

HEADLEE: And let's start with what's happening in Geneva right now. What kind of progress is being made?

GJELTEN: You know, it's - I've covered these stories. These are one of those situations where you, as a reporter, wait in the lobby of the hotel and sort of grab diplomats as they come and go, and try and parse their words. And one day, they say I'm feeling optimistic. And the next day, they say they're feeling not optimistic. And it often depends on their mood at the moment. You know, it's a waiting game. There's movement. There's progress. You know, nothing firm to report yet. We're waiting on Peter Kenyon, our guy on the ground there, to give us the updates.

HEADLEE: All right, so let's talk about these sanctions particularly against Iran. What kind of sanctions - I mean, we're talking about sanctions not just from the U.S. What kind of sanctions have been in place?

GJELTEN: Celeste, these are the most severe sanctions ever put in place against any country in history. And you're right, they are not just from the United States. There are United Nations sanctions. There are sanctions from the European Union. The really important ones are the ones that have made it just about impossible for Iran to sell oil. And oil sales are really important to the Iranian economy. Last summer, the European Union stopped buying oil from Iran. The United States stopped, a long time ago, buying oil from Iran, but also has introduced sanctions where we punish other countries that are buying oil from Iran. So the effect of all that has really been to cut back hard on Iran's oil sales and, therefore, its oil revenues.

Eighty percent of its foreign exchange comes from oil sales, so that has really hurt. And then another big element - I mean, there's a long list of sanctions, but another big element is Iran has basically been kicked out of the, what's called the, SWIFT system, which is how you transfer money electronically. Literally now, Celeste, if Iran earns money overseas, it almost has to bring the cash back in suitcases. That's what it's come to. So it's really hurting Iran.

HEADLEE: And obviously, it sounds like it's hurting the Iranian government, but the problem always with any kind of sanctions is people complain that it hurts the people most. I wanted you to take a listen to this clip. This is a human rights activist - an Iranian human rights activist named Susan Tahmasebi.

(SOUNDBITE OF INTERVIEW)

SUSAN TAHMASEBI: They say that the impact of sanctions has really, first and foremost, has impacted the sick. Medicine can't be found. And even when I was in Iran in 2010, I could see that this was taking effect and that medicines couldn't be found. But cancer patients, for example, who don't have a good prognosis are deciding not to go through with medical care because it's too expensive and difficult to find.

HEADLEE: So what kind of effect does these kind of moral issues have when people - when the international committee's deciding on sanctions and deciding whether to lift them?

GJELTEN: You know, Celeste, sanctions are a really blunt instrument, very hard to use successfully. And one of the problems is precisely that they often hurt the people you want to help, and actually help the people you want to hurt because what you get when you have sanctions is you set up black market opportunities. Like this woman was saying for medicine, for example. If you want to buy medicine, you might have to get it on the black market. So what does that do? That empowers the profiteers, the black marketers. The criminal elements in society often become richer and more powerful under sanctions. You know, you have in Iran a situation where unemployment has basically doubled. Inflation is very high. The cost of milk, bread, food items has gone through the roof. So that's all hurting the, you know, the guy on the street.

HEADLEE: If you're just joining us, we're speaking with NPR's Tom Gjelten about the ongoing nuclear talks with Iran and whether sanctions have been working there. But let's talk about sanctions in general, and what we've learned about when the so-called blunt instrument works and when it doesn't. I mean, when you look at places like South Africa or Cuba, for example - are those places where sanctions were successful?

GJELTEN: You know, interestingly enough, I think you could make the argument that Iran is the place where sanctions have actually been the most successful for this reason - that last June, you had a presidential election where a candidate said, I think that we have suffered enough from these sanctions. We have to change our negotiating posture with respect to the West. And he is now doing precisely that. So sanctions brought Iran to the table. That's actually exhibit A. The Peterson Institute for International Economics took a real in-depth look at this question, Celeste. And they found that sanctions work only at best about a third of the time.

And then, sometimes in those cases just partially. In two-thirds of the time, sanctions are basically a complete failure. So where do they work? What they found is that, as you can expect, unilateral sanctions, by one country, are far less likely to work because other countries don't honor them. Perfect example is Cuba. The United States is the only country involved in sanctioning Cuba, and they really had no effect. Multilateral sanctions - the more countries that are involved behind the sanctions - the greater the chances they'll work. Interestingly, they also work with countries that are relatively friendly. South Africa, you mentioned. South Africa basically wanted to be part of the Western world...

HEADLEE: Yeah.

GJELTEN: The elite in South Africa was really sort of upset that they, you know, couldn't participate in sporting events. They maybe couldn't travel as freely. Sanctions actually worked pretty effectively in South Africa to end apartheid. You know...

HEADLEE: What about in, like, North Korea?

GJELTEN: North Korea has been a complete failure.

HEADLEE: Yeah.

GJELTEN: Has had no effect at all, partly, 'cause they're completely - you know, they could give a darn if, you know, they're on good relations with the West or not. So, you know - and another - another important point is, if you want to use sanctions to overthrow a government, to bring about regime change, forget it. If you want to have really small policy objectives that you want changed, then you have a much better chance of success in that case.

HEADLEE: So why do we then think that the sanctions have worked in Iran? Because they were so severe?

GJELTEN: They were so severe. They were so stifling that basically it just got to the point - but they haven't worked yet. As they say, they worked to bring Iran to the negotiating table. They have not worked to convince Iran to give up, you know, any idea of having a nuclear weapon. So the jury is still out. They were partially successful in bringing the Iranians to the negotiating table - and you're right - because they are the most severe sanctions in the history of sanctions.

HEADLEE: And because they're kind of universal. This is a global agreement.

GJELTEN: Exactly. Right. And that's what it takes to make sanctions really painful. You know, this Peterson Institute study found that the more of a damage you do to the economy, the more likely you are to have a successful sanctions regime.

HEADLEE: All right, so what's sort of the sticking point here? What is it going to take to get the United States and other countries to lift these sanctions? What are they looking for?

GJELTEN: Well, they want - first of all, the deal that is being worked on in Geneva is for a six month sort of an interim agreement while they work on the bigger issues that ultimately they want Iran to dismantle its nuclear program, to completely stop enriching uranium. But, you know, right now, they're satisfied with limiting Iran to enriching uranium only to 3.5 percent, as opposed to 20 percent. Twenty percent enrichment is much closer to a nuclear weapon.

They've asked Iran to give up plans to build a plutonium reactor. That would give them another route to a bomb. So far - and more intrusive inspections by the international community - going in to inspect Iran's facilities. These seem to be the main things that Iran, at this point, seems willing to give up. And in return, Iran has something like a hundred billion dollars frozen in overseas accounts. They're going to give Iran a portion of that, maybe like about $10 billion of some of those frozen assets. And they're going to lift some, what they call, ancillary sanctions - some sanctions on the auto industry etc. So some - you know, some movement on both sides provisionally with the idea of a bigger bargain down the road.

HEADLEE: What is the discussion, though. I mean, I know there are people who still feel like they should just simply lift the sanctions on Iran because they're inhumane. They're unfair to the Iranian population, right? I mean, we don't have a universal consensus on either the effectiveness of sanctions or even the humanity of sanctions.

GJELTEN: Well, that's right. You know, you can say that the danger of Iran having a nuclear weapon is not just that it would potentially attack Israel, which is something that people talk about, but if Iran gets a nuclear weapon, Saudi Arabia will want a nuclear weapon...

HEADLEE: Right.

GJELTEN: ...And Turkey will want to nuclear weapon. You'll get this very destabilizing arms race. So you have to weigh the cost to the people versus the cost of Iran having a nuclear weapon. And if the cost of Iran having a nuclear weapon is high enough, you've got to do something short of war. And that's always been the argument for sanctions. Yeah, they hurt people, but it's better than bombing them.

HEADLEE: How much have the sanctions been respected? I mean, are there deals going on, say, with Russia or China under the table that are sort of in the shadow and in the background that are still supplying Iran?

GJELTEN: Yes. I mean, Iran is continuing to build centrifuges, for example. And I was asking some experts about this, and apparently, China has been providing some of the equipment and materials and expertise to help them build the centrifuges.

HEADLEE: Right.

GJELTEN: Russia has been involved in this. But I think that, you know, by and large, there is quite as strong international consensus that Iran should not have a nuclear weapon. And so, you know, for the most part, there's been pretty surprising support for these sanctions, even from countries like Russia and China.

HEADLEE: And, Tom, you've been doing this for a very long time. And I know we're often skeptical when we hear of things like progress in negotiations like this. But what's your gut feeling? Is this the closest we've gotten, say, within the foreseeable past or foreseeable future? Is this as close as we've gotten?

GJELTEN: You know, we haven't had a situation where Iran has actually been negotiating with the West the way it has been here. These are clearly the closest - this is clearly the closest that we have come in years to any kind of deal with Iran. And so we're on the verge of sort of bringing Iran back into the international community, back into the international conversation. So that is progress. And, you know, both sides really want a deal to be struck. Congress is - you know, hasn't been heard from yet - a lot of members of Congress that aren't willing to give the kind of sanctions relief Iran is looking for. So, you know...

HEADLEE: Yeah.

GJELTEN: ...Story's not over yet.

HEADLEE: Maybe. NPR's Tom Gjelten. Thank you so much.

GJELTEN: You bet.

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