Hostname: page-component-78c5997874-94fs2 Total loading time: 0 Render date: 2024-10-30T21:43:59.521Z Has data issue: false hasContentIssue false

The Unintended Consequences of US-led Sanctions on Iranian Industries

Published online by Cambridge University Press:  01 January 2022

Mehdi Majidpour*
Affiliation:
Research Institute for Science, Technology and Industrial Policy Sharif University of Technology, Tehran, Iran

Abstract

This paper aims to understand the consequences of US-led sanctions on two important industries in Iran: the oil and gas industry and power plant construction. Using qualitative methods and providing empirical evidence, this paper demonstrates the shortcomings of the pro-sanctions argument in the Iranian context. This paper argues that pro-sanctions literature is more inclined towards American politics; it ignores socially recurring effects such as empowering self-reliance in the target country. In the Iranian context, while sanctions regimes are beyond the control or power of industry managers, they have acted as a double-edged sword. On one hand, the sanctions have imposed extra costs on domestic companies in acquiring technological knowledge. On the other hand, they have stimulated policy-makers' determination and empowered a self-reliance doctrine amongst them.

Type
Articles
Copyright
Copyright © The International Society for Iranian Studies 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I am grateful for the valuable comments provided by Dr. Hossein Shahidi and by the anonymous reviewers.

References

1 Dobbins, J., “Coping with a Nuclearising Iran,” Survival 53, no. 6 (2012): 3750CrossRefGoogle Scholar.

2 For instance, the US Navy targeted Iranian oil fields in 1987. In 1992, Iran filed an application with the International Court of Justice (ICJ) requesting that the United States be held responsible for a series of attacks by the US Navy against certain Iranian offshore oil platforms in the Persian Gulf in October 1987 and April 1988, and claiming reparation. The details of Iranian and American claims and counterclaims are explained in Bekker, P., “Oil Platforms (Iran v. United States),” The American Journal of International Law 98, no. 3 (2004): 550–8CrossRefGoogle Scholar.

3 Available from: http://www.indexmundi.com/g/r.aspx?t=20&v=93&l=en and natural gas, http://www.indexmundi.com/g/r.aspx?t=20&v=139 (accessed September 6, 2012).

4 Tarock, A., “Iran–Western Europe Relations on the Mend,” British Journal of Middle Eastern Studies 26, no. 1 (1999): 4161CrossRefGoogle Scholar.

5 Central Bank of Iran (CBI), Summary of Economic Trends in the fiscal year Mar. 21, 2010—Mar. 20, 2011 (2012), Report in Farsi, Available at: www.cbi.ir.

6 BP Statistical Review of World Energy (2012), http://www.bp.com/statisticalreview

7 Oil and Energy Trends, “Iran Threatens Gulf Oil Exports as Sanctions Row Escalates,” 37, no. 2 (February 2012): 3–6.

8 Kaempfer, W.H. and Lowenberg, A.D., “International Sanctions,” The Journal of Economic Perspectives 17, no. 4 (2003): 233–5Google Scholar.

9 Kaempfer, W.H. and Lowenberg, A.D., “Unilateral Versus Multilateral International Sanctions: A Public Choice Perspective,” International Studies Quarterly 43, no. 1 (1999): 3758CrossRefGoogle Scholar.

10 Davis, L. and Engerman, S., “History Lessons: Sanctions – Neither War nor Peace,” The Journal of Economic Perspectives 7, no. 2 (2003): 187–97CrossRefGoogle Scholar; Kaempfer and Lowenberg, “International Sanctions” and “Unilateral Versus Multilateral International Sanctions.”

11 O'Sullivan, M.L., “Iran and the Great Sanctions Debate,” The Washington Quarterly 33, no. 4 (2010): 721CrossRefGoogle Scholar.

12 O'Sullivan, “Iran and the Great Sanctions Debate.”

13 K. Katzman, “Iran Sanctions,” Congressional Research Service, April 9, 2010, http://www.crs.gov (accessed May 17, 2012); Dobbins, J., “Coping with a Nuclearising Iran,” Survival 53, no. 6 (2012): 3750CrossRefGoogle Scholar; RAND, “Iran's Nuclear Future: Critical U.S. Policy Choices” (2011), http://www.rand.org/content/dam/rand/pubs/.../2011/RAND_MG1087.pdf

14 A. Cohen, J. Phillips, and O. Graham, Iran's Energy Sector: A Target Vulnerable to Sanctions, The Heritage Foundation, no. 2508, February 2011.

15 Cohen et al., Iran's Energy Sector.

16 “Implementing of Fuel Rationing Policy in Iran has Reduced 137 b$ Only in Gasoline Consumption,” IRIB News, http://www.iribnews.ir/NewsText.aspx?ID=1606897. The policy has also helped the government to limit fuel smuggling to neighbor countries.

17 Kozhanov, N.A., “U.S. Economic Sanctions against Iran: Undermined by External Factors,” Middle East Policy XVIII, no. 3 (2011): 144–60CrossRefGoogle Scholar.

18 Kozhanov, “U.S. Economic Sanctions against Iran.”

19 Drezner, D.W., “Sanctions Sometimes Smart: Targeted Sanctions in Theory and Practice,” International Studies Review 13 (2011): 96108CrossRefGoogle Scholar.

20 Drezner, “Sanctions Sometimes Smart.”

21 Willett, T.D. and Jalalighajar, M., “U.S. Trade Policy and National Security,” Cato Journal, 3, no. 3 (1983): 717–27Google Scholar; Alikhani, H., Sanctioning Iran: Anatomy of a Failed Policy (London: I.B. Tauris, 2000)Google Scholar; Fayazmanesh, S., The United States and Iran: Sanctions, Wars, and the Policy of Dual Containment (London: Routledge, 2008)CrossRefGoogle Scholar.

22 Although there had not been any UN-led sanctions against Iran before 2006, Western European countries followed the US to avoid constructing any nuclear power plant in Iran.

23 S.C. Pelletiere, Landpower and Dual Containment: Rethinking America's Policy in the Gulf (November 1999), http://www.strategicstudiesinstitute.army.mil/pdffiles/pub186.pdf; B. Conry, “America's Misguided Policy of Dual Containment in the Persian Gulf,” Cato Foreign Policy Briefing, no. 33 (1994), http://www.cato.org/pubs/fpbriefs/fpb-033.html

24 Fayazmanesh, The United States and Iran.

25 BBC Report (2006), http://news.bbc.co.uk/1/hi/world/middle_east/4709490.stm (accessed August 6, 2012).

26 Fars News Agency (2007), http://www.farsnews.com/newstext.php?nn=8602020011 (accessed August 6, 2012).

27 Eurodif (European Gaseous Diffusion Uranium Enrichment Consortium) is a subsidiary of the French company AREVA, which produces enriched uranium. It is a joint stock company and was formed by France, Belgium, Italy and Spain in 1973, and then in 1974 Iran joined this company. Iran owns a 10 percent stake, and is entitled to the plant's output. However, the political conflicts have caused enriched uranium not to be delivered to Iran by the French government. Iran points to this case as evidence of why the West cannot be trusted to provide credible fuel guarantees, and cites the Eurodif experience as the reason for wanting to achieve energy independence by developing all the elements of the nuclear fuel cycle itself (World Nuclear Association, Nuclear Energy in Iran (2012), http://www.world-nuclear.org/info/inf119_nucleariran.html).

28 Takeyh, R. and Maloney, S., “The Self-limiting Success of Iran Sanctions,” International Affairs 87, no. 6 (2011): 1297–312CrossRefGoogle Scholar.

29 Dumbrell, J., “American Power: Crisis or Renewal?,” POLITICS 30, no. S1 (2010): 1523CrossRefGoogle Scholar, and Takeyh and Maloney, “The Self-limiting Success of Iran Sanctions.”

31 Katzman, K., Murphy, R., Cameron, F., Litwak, R., Sick, G., and Stauffer, T., “The End of Dual Containment: Iraq, Iran and Smart Sanctions,” Middle East Policy VIII, no. 3 (2001): 7188CrossRefGoogle Scholar.

32 Katzman et al., “The End of Dual Containment.”

33 Interview with Vice President of Industrial Development & Renovation Organization of Iran, July 17, 2011.

34 Torbat, A.E., Impacts of the US Trade and Financial Sanctions on Iran (Oxford: Blackwell Publishing, 2005), 417Google Scholar.

35 United Nations Security Council, “Security Council imposes sanctions on Iran for failure to halt uranium enrichment”, unanimously adopting Resolution 1737 (2006), http://www.un.org/News/Press/docs/2006/sc8928.doc.htm (accessed May 17, 2012).

36 Majidpour, M., “Heavy Duty Gas Turbines in Iran, India and China: Do National Energy Policies Drive the Industries?,” Energy Policy 41 (2012): 723–32CrossRefGoogle Scholar, and Majidpour, M., “Externalities in North–South Technology Transfer: The Case of CNG Engines in Iran,” World Review of Science, Technology and Sustainable Development 9, no. 1 (2012): 114CrossRefGoogle Scholar.

39 US Energy Information Administration (EIA) Data on Iran (2011), http://www.eia.gov/countries/cab.cfm?fips=IR (accessed May 17, 2012).

40 Fars News Agency (2007b), http://www.farsnews.com/newstext.php?nn=8607240806 (accessed May 17, 2012).

41 “Iran, Qatar, Russia Form Gas Alliance,” The Wall Street Journal (22 October 2008), http://online.wsj.com/article/SB122460817038154673.html (accessed May 17, 2012).

42 International Energy Agency (IEA), Natural Gas Market Review (2009).

43 Shana News Service, “Iran, Oman to Cooperate in Oil, Gas Sectors” (2009), http://www.shana.ir/144905-en.html (accessed May 17, 2012); Arabian Oil & Gas, Available from: http://www.arabianoilandgas.com/article-9759-gas-guzzling-oman-sizes-up-shale-gas-development/ (accessed August 6, 2012 ).

44 Pant, H.V., “India's Relations with Iran: Much Ado about Nothing,” Center for Strategic and International Studies, The Washington Quarterly 34, no. 1 (2011): 6174CrossRefGoogle Scholar, http://csis.org/files/publication/twq11winterpant.pdf (accessed August 6, 2012).

45 Reuters, “EU Discussing Plan to Start Iran Oil Ban on July 1,” January 17, 2012, http://www.reuters.com/article/2012/01/17/us-iran-eu-sanctions-idUSTRE80G14Y20120117 (accessed May 17, 2012).

46 Bloomberg, “Iran Embargo Impossible to Meet as Ships Need Its Oil,” May 3, 2012, http://www.bloomberg.com/news/2012-05-03/iran-embargo-impossible-to-meet-as-ships-need-its-oil.html (accessed August 6, 2012).

47 Gerschenkron, A., Economic Backwardness in Historical Perspective (Cambridge, MA: Belknap Press, 1962)Google Scholar, cited in Fagerberg, J., Mowery, D., and Nelson, R., Oxford Handbook of Innovation (Oxford: Oxford University Press, 2005)Google Scholar; Abramovitz, M., “Catching-up, Forging Ahead, and Falling behind”, The Journal of Economic History 46, no. 2 (1986): 385406CrossRefGoogle Scholar; Hobday, M., “Export-led Technology Development in the Four Dragons: The Case of Electronics,” Development and Change 25, no. 2 (1994): 331–61CrossRefGoogle Scholar; Radosevic, S., International Technology Transfer and Catch-Up in Economic Development (Northampton, MA: Edward Elgar Publishing, 1999)Google Scholar; Mazzoleni, R. and Nelson, R., “Public Research Institution and Economic Catch-up”, Research Policy 36 (2007): 1512–28CrossRefGoogle Scholar.

48 Interview with Engineering Deputy Director of MAPNA, July 5, 2009.

49 Gregory, D., The Colonial Present (London: Blackwell, 2004)Google Scholar; Jeffrey, A., “The Politics of ‘Democratization’: Lessons from Bosnia and Iraq,” Review of International Political Economy 14, no. 3 (2007): 444–66CrossRefGoogle Scholar.

50 Interview with Vice President of Industrial Development & Renovation Organization of Iran, July 17, 2011.

51 Interview with the Senior Deputy Minister of Energy, June 16, 2009.

52 Interview with MAPNA R&D Head, August 2, 2009.

53 Interview with Oil Turbo Compressor CEO, August 3, 2011.

54 Interview with Vice President of Industrial Development & Renovation Organization of Iran, July 17, 2011.

55 Deputy of Research & Technology in Ministry of Petroleum, July 27, 2012, http://iraneconomist.com (accessed August 13, 2012).

56 Petrochemical Research and Technology Company, http://www.npc-rt.ir/newsdetail-631-fa.html (accessed August 13, 2012).

57 News archives, May 12, 2012, www.nedaonline.ir (accessed August 13, 2012).

58 Kim, L., “Crisis Construction and Organizational Learning: Capability Building in Catching-up at Hyundai MotorOrganization Science 9, no. 4 (1998): 506–21CrossRefGoogle Scholar.

59 Interview with Vice President of Industrial Development & Renovation Organization of Iran, July 17, 2011, and Oil Turbo Compressor CEO, August 3, 2011.

60 Majidpour, “Heavy Duty Gas Turbines in Iran, India and China.”

61 Interview with MAPNA's Senior Vice President and Member of the Board, June 25, 2009.

62 Interview with Engineering Deputy of MAPNA, July 5, 2009.