Sanctions and the Iranian Nuclear Deal: Silver Bullet or Blunt Object?

since the seizure of the american embassy in tehran more than 36 years ago, economic sanctions have been at the heart of Washington’s strategy for dealing with Iran. For most of that period, sanctions carried more symbolic than strategic value. That changed dramatically over the course of the past decade as Washington erected a far-reaching set of restrictions on Tehran’s access to the international financial system and persuaded the world to abide by the measures and to curb investments and trade with Tehran.

This pressure had a devastating impact on Iran’s oil exports and revenues, the value of its currency, and the stability of its economy as well as the confidence of its citizens. In June 2013, Hassan Rouhani was elected to the Iranian presidency on a platform of ending Tehran’s debilitating impasse with the world over its nuclear program. Over the course of the subsequent months, the long-stalemated negotiating process assumed a new urgency and the two sides moved fitfully toward a final agreement, signed in July 2015.

In the wake of Rouhani’s election and the intensification of the nuclear talks, the issue of economic sanctions emerged as a crucial factor in the apparent shift in Iran’s approach to the nuclear standoff and to the success of the negotiations themselves. And after decades of skepticism about their utility, sanctions were widely credited with turning Tehran toward a more moderate leadership and facilitating the diplomatic breakthrough.

That assessment was substantially correct: the fierce multilateral sanctions regime erected between 2007 and 2013 played a pivotal role in persuading Iran to abandon its recalcitrance toward the nuclear negotiations with six world powers, including the United States. Even Ayatollah Ali Khamenei, who serves as Iran’s supreme leader and its ultimate decisionmaker, has acknowledged that the primary purpose of Iran’s diplomatic engagement with the nuclear issues was to release the external economic pressure on his country.

“We negotiated so that the sanctions framework will be eliminated and that sanctions in general will be lifted,” Khamenei said in September 2015. “We could have continued our research in the same way and at the same rate and we could have done other things. The reason why we entered into negotiations and made some concessions was to lift sanctions” (Khamenei.ir 2015). The supreme leader also reinforced the causal relationship between the sanctions and the decision to press for a resolution of the nuclear issue in his October 2015 letter to Rouhani that endorsed the deal.

Impact is not efficacy, however. While sanctions played a role in shaping Iranian decisionmaking on whether and how to negotiate, it is less obvious that they contributed to generating the most optimal outcome. Ultimately, the text of the final deal concluded in July 2015 by Tehran, the United States, and five other world powers (Russia, China, Britain, France, and Germany) suggests a more ambivalent bottom line for the utility of sanctions in achieving specific foreign policy goals. The disparity between the agreement’s sweeping sanctions relief and the more parsimonious scope of its constraints on Tehran’s nuclear activities underscores the limitations to the use of sanctions as leverage in the negotiations themselves.

A review of the factors contributing to the impact of the Iran sanctions as well as the limitations on their utility offers a useful corrective to the recent infatuation with sanctions and the corresponding tendency to overestimate their efficacy in solving international problems without the use of military force. Sanctions may have been the silver bullet that brought Iran back to the negotiating table, but they proved too blunt an instrument to advance the most advantageous terms of a deal.

The Efficacy of Iran Sanctions: What Worked

The first United States sanctions levied against Tehran went into effect in response to the November 1979 seizure of the US embassy in Tehran. Although those measures were lifted in early 1981 as part of the agreement that freed the US personnel held hostage by the Iranian government, Washington applied some level of economic restriction against Tehran for the better part...