The LA Times has the latest evidence that Iran sanctions are not working: well-connected businesses and government operations are dodging the sanctions. Even more shocking, some profit directly from sanctions through the emerging “sanction-breaking” industry.
This sad truth confirms our point: Ahmadinejad and pro-government elite profit from the sanctions while ordinary citizens suffer.
Tightened international sanctions meant to punish Iran for its nuclear program may be strengthening the country’s hard-line elite, as blacklisted firms linked to the powerful Revolutionary Guard manage to circumvent and even profit from the embargo.
Businesspeople, officials and analysts inside and outside the Islamic Republic describe the sanctions as taking a toll on the economy and ordinary citizens, increasing the cost of everything from the production of medicine to the manufacture of baguettes.
But they also say key businesses and government operations controlled by the Revolutionary Guard have found ways to skirt the sanctions, which ban trade with state-run firms connected to the nuclear program, by enlisting private-sector firms as fronts.
Well-connected companies are even finding ways to profit directly from the sanctions. Businesspeople say a sanctions-breaking industry is emerging, with firms specializing in helping others overcome the restrictions for a price. When one channel is blocked, managers seek others.
Later in the article, ordinary Iranian citizens describe how their non-sanctioned businesses are severely weakened due to skyrocketing costs and international trade restrictions:
One wholesale importer of precision timing equipment said he’s been forced to increase his prices by as much as 35% in part because he must use currency exchange shops instead of banks to conduct transactions with foreign suppliers.
A manufacturer of elevators said simple electronic parts that used to cost $2 before the sanctions now cost nearly $9, increasing the cost of repairing lifts. A manager at one of Iran’s leading pharmaceutical firms said an inability to obtain letters of credit from Western banks hurts Iran’s ability to produce high-quality medicine.
“When we produce vitamins or aspirin … it is not important whether it is 302 or 310 milligrams,” he said. “But when we produce sleeping pills or sensitive tranquilizers, the difference between 5 and 10 milligrams is vital. For that, we need German or Swiss-made machines.”
The elevator manufacturer said because of increased costs, his company is losing ground to a firm affiliated with the Defense Ministry.
Mohammad-Reza Behzadian, a former Iranian lawmaker, describes the predicament: “The Iranian people are like cannon fodder caught between the barrage of two enemies: the West and the government of President Mahmoud Ahmadinejad.”