US Economic Sanctions Cripple Iran’s Pandemic Response

Written by Maddie Bridge-Davies

US-Iran negotiations continue as Covid-19 supplies are blocked by sanctions

The fourth round of talks over President Joe Biden’s bid to re-join the Iran nuclear deal wrapped up in Vienna on 7th May. Senior officials from Russia, Germany, China, Iran, Britain and France hope to reach an agreement by 22nd May, when Iran’s interim nuclear monitoring agreement with the UN expires.

The Trump administration unilaterally left the accord in 2018 and reimposed aggressive economic sanctions on Iran. By hampering the economy, the restrictions have crippled Iran’s national healthcare system and contributed to its “inadequate and opaque” Covid-19 response.

The sanctions resulted in shortages of medical and pharmaceutical supplies in Iran throughout the pandemic. The US Department of the Treasury issues general licenses to authorise activities that would otherwise be prohibited with regard to Iran. Tehran stated that the resources needed to tackle Covid-19 in Iran did not qualify for the general licenses. Decontamination equipment, full-mask respirators and sterilisation supplies require a special license.

At the start of the pandemic Iran’s access to currency to buy medical supplies on the international market was further restricted by sanctions against the Central Bank and the unavailability of waivers to purchase Iranian oil.

Iran’s request for a $5 billion loan from the International Monetary Fund to help contain the virus is still under consideration. In April 2020, the Wall Street Journal reported that the White House intended to block the emergency loan in fear of Iran’s government diverting the funds to help its economy or financing militants in the Middle East. President Hassan Rouhani said it will be “recorded as a historic disgrace” and accused the US Government of being a “terrorist on economic issues“.

The Islamic Republic of Iran has reported over 2.5 million confirmed cases and 72,000 deaths to the World Health Organisation since the outbreak of coronavirus. It is one of the hardest-hit countries in the world and the worst-hit in the Middle East. Iran’s Supreme Leader Ayatollah Ali Khamenei has forbidden the purchase of American and British-made Covid-19 vaccines because he does not trust these nations. Between 3rd February and 2nd May, Iran imported 3.19 million vaccines from ‘safe’ countries such as Russia, China, India and South Korea.

Coupled with the mismanagement and inefficiency of the government, Iran’s covid crisis is attributed to the reimposition of US sanctions. Although the sanctions formally exempt food, medicine and other humanitarian supplies, Human Rights Watch found that, in practice, US and European banks were still reluctant to risk triggering sanctions and legal action by exporting goods to Iran.

The UN Special Rapporteur Javaid Rehman, the Secretary-General and the UN High Commissioner for Human Rights have called on the US Government to alleviate stringent sanctions in order to enhance Iran’s pandemic response.

Since the US withdrew from the deal in 2018, Iran has violated certain provisions of the international nuclear agreement. In July 2019, the International Atomic Energy Agency verified that Iran was enriching uranium-235 above the 3.67 per cent limit established by the JCPOA.

The aim of the ongoing talks is to restore the nuclear deal and devise a roadmap in which Iran returns to full compliance. It must reduce the amount of uranium it enriches and terminate its use of advanced centrifuges. In exchange, the US will lift economic pressures. European Union members and diplomats from Russia and China are acting as intermediaries, with Iran and the US engaging in indirect negotiations.

The Joint Comprehensive Plan of Action (JCPOA) was devised in 2015 under former US President Barack Obama to curb Iran’s nuclear programme in exchange for economic incentives. The ultimate goal of the deal is to prevent Iran from developing a nuclear bomb, something it insists it does not want to do.

Following the meeting in Vienna on 7th May, Iran’s Deputy Foreign Minister Abbas Araqchi told Iranian state media that the US “have announced that they are ready to lift most of their sanctions, but we do not think it is enough”. An anonymous senior US State Department official said that reaching an agreement depends on Tehran making a political decision to comply with the terms, and to avoid increasing their demands.

President Trump abandoned the deal in 2018, describing it as “a horrible one-sided deal that should never, ever have been made“. He reinstated harsh economic penalties that had previously been suspended. These targeted Iran’s oil, banking, energy and shipping sectors. The decision “intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue“.

The sanctions programs restricted access to American markets for companies that engage in commercial transactions with Iran. This policy has deterred foreign banks and major importers of Iranian oil from participating in financial activities with Iran, in fear of incurring US secondary sanctions themselves.

The reinstatement of US sanctions has drastically impacted Iran’s economy. According to OPEC data, Iran’s crude oil production had dropped to 2.1 million bpd by October 2019. The country’s Gross Domestic Product (GDP) contracted by 5 per cent in 2020.

The talks have taken place against the backdrop of other challenges. In retaliation to the sabotage and large blackout inflicted on Natanz nuclear facility on 11th April, Iran began to enrich a small amount of uranium up to 60 per cent purity, the highest level it has ever reached. Iran suspects Israel to have orchestrated the attack to derail the talks as an act of “nuclear terrorism“.

In February 2021, President Biden confirmed that the US will not relieve Trump-era sanctions until Iran stops enriching uranium. However, Iran’s Foreign Minister Javad Zarif said in a tweet on 12th April that, following “terrorist sabotage”, Iran will only comply with the deal after economic penalties have been withdrawn.

There is a narrow window of opportunity to restore the deal. President Hassan Rouhani’s term in office will end in June, and he cannot be re-elected. Hardliners in Iran vehemently oppose the deal on the grounds that it has not delivered enough economic relief. The upcoming state elections are predicted to usher in a fundamentalist government in Tehran. As the JCPOA was agreed under Rouhani, the US could struggle to revive the deal after he has left office.

Featured images courtesy of Shuttershock. No changes have been made to these images.

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