U.S. Reimposes Sanctions Expected To Cripple Iranian Economy At midnight, the Trump administration reimposes sanctions that were lifted under the Iran nuclear deal. NPR's Michel Martin asks Ali Vaez of the International Crisis Group about the likely impact.
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U.S. Reimposes Sanctions Expected To Cripple Iranian Economy

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U.S. Reimposes Sanctions Expected To Cripple Iranian Economy

U.S. Reimposes Sanctions Expected To Cripple Iranian Economy

U.S. Reimposes Sanctions Expected To Cripple Iranian Economy

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At midnight, the Trump administration reimposes sanctions that were lifted under the Iran nuclear deal. NPR's Michel Martin asks Ali Vaez of the International Crisis Group about the likely impact.

MICHEL MARTIN, HOST:

At midnight tonight, the United States is set to reimpose the sanctions on Iran that were lifted under the nuclear deal in 2015. President Obama helped negotiate that agreement, but President Trump has called it the worst deal ever and withdrew from it earlier this year. Now, the Trump administration is taking the position that reinstating the sanctions will pressure Iran to negotiate a better deal and also curb its regional ambitions. Here's the U.S. Secretary of State Mike Pompeo.

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MIKE POMPEO: And we are working towards allowing the Iranian people to have the opportunity to have the government they want, a government that doesn't take wealth from their country and spend it on malign activity around the world.

MARTIN: So we wanted to investigate the question of whether reimposing the sanctions would actually work. So we've called the International Crisis Group, which addresses it in a new report. Ali Vaez heads the think tank's Iran Project, and he's with us now in our studios in Washington, D.C. Thank you so much for coming in.

ALI VAEZ: My pleasure.

MARTIN: Well, first of all, if you could just sum up, as briefly as you can, the sanctions that the administration is reinstating. And we also want to know what effect that they had had on Iran's economy.

VAEZ: So the sanctions that are coming back are basically targeting Iran's sources of revenue. They're going to deprive Iran of its ability to export oil. They're basically going to cut off 50 percent of Iran's oil exports. This is going to have a devastating impact on the Iranian economy. In fact, already, the national currency has lost half of its value. Inflation is rising from about 10 percent last month to, now, around 30 percent. And the International Monetary Fund predicts the Iranian economy is going to go into a recession as of next year.

MARTIN: And that sounds quite dramatic. But what's remarkable is that your report found, with an analysis of 40 years' worth of data, that this actually had no effect on Iran's regional activity. That just sounds remarkable. Why is that?

VAEZ: Well, it's very interesting because the Iranian regional policy has been defined and designed in a way that is actually low-cost, its asymmetric approach based on supporting proxies and partners in the region. And that usually requires very little money. In fact, even the State Department says Iran's support for Hezbollah amounts to about $700 million. That's not a lot for a country that, even under sanctions, is still going to be able to export about $25 billion of oil to its customers. And it has a foreign currency reserve that amounts to about hundred-billion dollars.

MARTIN: But your report also found that - after the nuclear deal was signed that Iran increased its military budget by 30 percent. Wouldn't that suggest that, perhaps, the administration has a point, that allowing Iran to sort of increase its economic activity has allowed it to increase its activities around the region?

VAEZ: I don't think so because if you look at the 2011-2012 period, that's when Iran's military budget was reduced by 30 to 40 percent. But that also coincides with the time that Iran significantly increased its military footprint in the region. In fact, in 2012, as a result of the sanctions that the Obama administration had imposed - which had international support, and they were really crippling for the Iranian economy - nevertheless, that's precisely when Iran sent its own troops and marshaled militias from across the region and sent them to Iraq and Syria.

MARTIN: Do you have a sense of the mood there as these sanctions are being reimposed tonight?

VAEZ: Well, it seems to me that the general mood in Iran is depressed. The Iranian people had hopes that the nuclear deal that came into effect in 2016 would basically end a long period of crisis and bring about normalcy. At this stage, I would say the Iranian people understand that it's very difficult for their leadership to negotiate with the Trump administration because of Washington's maximalist approach. But, at the same time, I don't think what the administration is expecting, which is that the Iranian people would rise up and would topple this regime, will materialize for two reasons. One is that the Iranian people have had an experience with radical change just four decades ago. And it didn't bring about anything better for them.

And they've also seen the experience of the Arab uprisings as of 2011. They also witnessed how that ended up in grief and, also, that there is no viable alternative to the Islamic Republic. And, you know, maybe the most important element here is that the Iranian system has the will and a fearsome capability to repress. The more likely scenario of Iran returning to the negotiating table is Iran walking away from the deal, at some stage, if pressure becomes intolerable for them.

MARTIN: That's Ali Vaez. He's the director of the Iran Project at the International Crisis Group. He was kind enough to join us in our studios in Washington, D.C. Thank you so much for talking with us.

VAEZ: Thank you, Michel.

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