Front Burner - What’s the toll of tough U.S. sanctions on Iranians?

Episode Date: July 2, 2019

On Monday, news broke that Iran violated a key part of the 2015 nuclear agreement. This comes about a year after the U.S. unilaterally pulled out of the deal. Iran says it breached the agreement because Europe hasn’t done enough to counter the heavy U.S. sanctions imposed on the country. Today on Front Burner, The Independent’s Negar Mortazavi explains how the heavy sanctions are affecting regular Iranians and shares her opinion on the strategy of the United States.

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The latest escalation between the United States and Iran came on Monday. News that Iran has broken a key part of the 2015 nuclear agreement it made with world powers, the one the U.S. unilaterally pulled out of about a year ago now. Tehran says it has now stockpiled more low-enriched uranium than allowed under the deal. Uranium, which is good for a civilian energy program, but not for making nuclear weapons. Iran says it breached the agreement because Europe hasn't done enough to deal with the heavy U.S. sanctions imposed on the country. Today, we're going to talk about those sanctions. What effect have they had on regular Iranians?

And what's the strategy behind them for the U.S.? Negar Mordezavi is a consultant editor with The Independent, a British online newspaper. And she's here with me today from Washington, D.C. This is Frontburner. Nagar, thank you so much for talking to me today. Thanks for having me. So I want to understand what these sanctions look like on the ground. Can you paint me a picture? The main effect of sanctions have been on the middle and working classes in Iran.

People who have to deal with daily prices, they have to directly deal with inflation, the cost of necessity, goods and commodities. The price of an egg has doubled, he says, just like the price of fresh fruits and vegetables. Milk is about 40% more expensive. There's also, we have to remember, a small portion of the population, the connected elite, as I call them, who actually benefit from the sanctions. How so? Well, because sanctions have for years created this ecosystem for a very corrupt and non-transparent financial dealings that's actually sponsored by the state because the government needs to do certain exports and imports for the economy. And they have to rely on non-state actors to do this evasion of the sanctions, basically going around of sanctions for them. And a lot of people have made actually big sums of money in this whole sanctions evasion scheme. So sanctions in a way have created a corrupt environment for people who benefited from them, but that's actually a small minority and a small number of people. But the main chunk of the society are the ones

who are actually taking the burden of these broad economic sanctions. Right, right. You mentioned the working class and the middle class. One of our producers spoke with a 23-year-old Iranian woman, and we're withholding her name for her safety, but she just finished her undergrad in chemical engineering. She's planning to go abroad for more education, but now she doesn't know if she can afford it. I decided to plan in order to go to Canada. And suddenly this stuff happened and you have no idea how the prices, you know, somehow rocketed. And we planned for like 45 million tomans.

And now I have to actually change it to 300 million tomans and that is too much you know it's sudden changes too much. She talked about the skyrocketing cost of meat and apples. For meat they're searching for something you know much cheaper that is in low quality it's because of you know the prices went up you know, the wages are still the same. And the sort of loss of control and hope. You know, Iran is my country and I love it. Somehow, you know, it's insanely just got stuck in, you know, situation. We are in an age that we really need to have hope, you know, for our future.

And we are, we can't. Is this kind of feeling typical for young people it is so inflations have gone up to 40 and 50 percent at certain months the unemployment rate keeps rising and that's actually higher for the young and educated adults people like the person you've spoken to have a high there's a higher rate of unemployment for people who graduate from college there's less hope and opportunities for a future i'm looking for a job kind of but i don't i'm not really hoping that i'm gonna find one and also as you said because of the devaluation of the iran currency, people have much less chances of taking any

vacation or travel for school and education abroad. I want to get into those specific sanctions in a moment. But first, I understand you were born in Iran, but you live and work in Washington. And when you talk to your friends and family back home, who do they blame for the conditions they have to live under? I would say the majority of the people I talk to have a clear understanding of the politics of all of this. And they blame both their own government, their Iranian government, and also the U.S. administration. They're honoring government for creating or being at least one side of this tension with the U.S. and also for internal mismanagement and corruption. I'm stressed. My mind is always busy thinking about what will happen tomorrow,

what wrong decisions our leaders will make next. How will they decrease pressure on the people? I hope one day we will see our leaders make better decisions. But now they think in a selfish way. There's a lot of corruption seen among the high ranks of the government. There's a lot of mismanagement of the funds because Iran is actually a relatively rich country with a lot of natural resources. So people see that, people see that there's a lot of resource, but it doesn't trickle down to the entire population. And that that makes them upset. And then at the same time,

they see a US administration who continuously claims in their words, that they care about the Iranian people that they don't want to pressure the Iranian people, and they only have problems with the regime. But in reality, these economic sanctions are so broad that the main and the first and foremost victims of them are actually the Iranian people. Donald Trump will also break the deal with North Korea. He's an unwise person and no one has confidence in him. Today he says something, tomorrow he will say something else. Someone who makes a pledge and an hour later takes it back is not human. I want to go through these sanctions with you.

I know that Iran has had such a long history with sanctions. Can we go through the latest ones? So can you tell me about the sanctions that started a little over a year ago after the U.S. unilaterally pulled out of the Iran nuclear deal? So these sanctions, the nuclear related sanctions were actually mostly put on under the previous administration, President Obama, and then they were lifted as part of the nuclear deal. So Iran agreed to limit its nuclear program and the U.S. agreed to lift its economic sanctions on Iran. Some reprieve, essentially, for backing off nuclear ambitions. Exactly. Iran currently has a stockpile that could produce up to 10 nuclear weapons. Because of this deal, that stockpile will be reduced to a fraction

of what would be required for a single weapon. Last year, President Trump decided to exit the nuclear deal as the Iranian sea violated and then reimposed sanctions that were lifted as part of the deal. So these economic sanctions include almost all sectors of the Iranian economy, oil and gas, petrochemicals, precious metals, financial and banking sanctions, a very broad range of economic sanctions that target many government and also private sector industries have been put on Iran over the course of the past year. And then the latest round of sanctions just in the past weeks was the sanctions that were announced on the Iranian Supreme Leader. We'll deny the Supreme Leader and the Supreme Leader's office and those closely affiliated with him and the office access to key financial resources and support.

And let's talk about those. This happened just last week. Exactly. So the Iranian Supreme Leader actually controls a vast economic empire. Basically, the organization is under his control. And the last round of sanctions were put on his office. But expert sanctions experts are skeptical as the actual effects, the actual financial effects of these sanctions. Right, because I mean, the question I had when I heard this was, does the Ayatollah have like a Bank of America account? No, he doesn't. He doesn't really travel outside of the country. He doesn't really have assets in the West. And the financial institutions that are under his control don't really operate within the financial systems that the U.S. controls or has connections to.

So these sanctions are more symbolic and more political to send a message to Tehran. We will continue to increase pressure on Tehran until the regime abandons its dangerous activities and aspirations, including the pursuit of nuclear weapons, increased enrichment of uranium, development of ballistic missiles, engagement in and support for terrorism, fueling of foreign conflicts. And it's actually a mixed message because President Trump says he doesn't want regime change. He wants to negotiate with the current leaders of Iran. I know so many people from Iran. These are great people. It has a chance to be a great country with the same leadership.

And then he goes ahead and sanctions the top leader of the country, which is what U.S. administrations in the past have done when they wanted a leader to be gone, when they wanted regime change for Saddam Hussein, for someone like Qaddafi. That's been the message that was sent from Washington. And now President Trump is sending this message to Tehran, which from the Iranian viewpoint is a mixed message. And of course, these latest sanctions and the sanctions against the Ayatollah himself come at a time when tensions are already incredibly high, right? Like, U.S. President Donald Trump said late last month that he came very close to authorizing military strikes against Iran after it shot down an American drone over the Strait of Hormuz. And they said, sir, we're ready to go. We'd like a decision. I said,

I want to know something before you go. How many people will be killed? Iran said the drone was in their airspace. The U.S. said it was in international airspace. But the incident also followed attacks on petrochemical tankers in the Gulf of Amman. And the U.S. blamed this on Iran. And Iran denies it. New images of what Team Trump says is an Iranian attack coming after a video was not enough to convince key allies, including Germany and Japan, that Iran was responsible for the attack. And so how is what's happening with these sanctions fit into this larger context?

Well, the President Trump's administration seems to think, or President Trump himself administration seems to think, or President Trump himself actually seems to think, that the more pressure he puts on Iran, the more chance he'll get to bring the Iranians to the negotiating table and cut a new deal with them, as he's been talking about since his campaign time. And it seems like he thinks he can use the same blueprint for North Korea. He ratcheted up pressure. He called the leader a little rocket man. And then it came down at the end to photo ops and love letters, as he called it, and summits and praises.

He wrote me beautiful letters. And they're great letters. We fell in love. He is now the first sitting U.S. president ever to set foot in North Korean territory. I've never expected to meet you at this place. And it seems like he thinks that is going to work with the Iranians. That is not going to be a very successful strategy because Iranian leadership has a very different way of thinking than North Korea and has a very different relationship with the U.S.

Iranian leaders are not looking for this kind of public world stage legitimacy from a U.S. leader. In fact, I can't think of any Iranian official who wants to be in a photo with President Trump. So the more sanctions and the more pressure, and this is an experience of the past four decades, has been cornering Iranians into becoming more defensive, especially over the past year. And that has brought us to the current situation, which is very high, very intense and very dangerous in the region. It's a volatile region and any kind of escalation could not only be devastating for the U.S. and Iran, but also for other countries in the region. President Hassan Rouhani did not hold back.

They are suffering from mental disability. but also for other countries in the region. President Hassan Rouhani did not hold back. They are suffering from mental disability. A person loses his mind and does something insane and stupid. So what? They say they will put sanctions on our leaders' property. But what is our leaders' property? A simple house and a ceremony hall. Iranian leadership has been basically calling the United States a big enemy, and this goes back even before the Iranian revolution and before the Islamic Republic.

We have to go all the way back to 1950s when the U.S. staged a coup and returned the monarch, the Shah, back to Iran. That is the coup that toppled Iran's democratically elected prime minister, Mohammad Mossadegh, had moved to nationalize oil production in Iran. Well, the U.S. was concerned at the time that that would mean a victory for the Soviets in the Cold War. That's basically the top item on the list of grievances on the Iranian side against the U.S.

And the Iranians have always had this on the back, on their psyche, on the back of their mind, that the U.S. is going to meddle in their internal politics. And then also the 1979 revolution. Khomeini returned a hero, the man who from long distance had led the revolution to topple the Shah. In an obvious reference to the United States, he said, foreign advisors have ruined our culture and have taken our oil. The hostage crisis with the U.S.

Some 60 Americans are now beginning their sixth day of captivity inside the U.S. embassy in Tehran. So the grievances are very, very long on both sides, and the animosity has been high specifically between these two countries. We'll be back in a second. Thank you. free book. Go to www.audible.ca slash cbc to learn more. I'm interested to hear your perspective here. Iranian officials said Monday that they breached this limit on low enrichment uranium stockpiles, which is against the 2015 nuclear agreement, which was essentially designed to stop Iran from being able to obtain nuclear weapons. And Iran is saying that the reason why they did this is because Europe had not done enough to limit the effects of American sanctions.

And what do you make of that? Well, it's been a year since President Trump violated a nuclear deal while Iranians were abiding by it. And the Iranians said, that's fine, we're going to stay in the deal because this was a multilateral deal. It was Europe, Russia, and China, as well as the United States. Iranians said, we'll stay in it as long as the Europeans and other signatories are able to make up for the economic loss of the U.S. absence. And the Europeans actually came out behind the deal pretty strong.

They came out with very strong political statements. Because we believe that this is the security interests of not only our region, but also of the world. If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained. And they promise to be able to make up for the economic loss because it's in their own security to prevent Iran, to make sure Iran's nuclear program is limited and another nuclear state is not created in the Middle East. The financial mechanism introduced by Britain, Germany and France will allow companies to trade with Iran without direct financial transactions and therefore without using the U.S. dollar. But they haven't really been able to deliver on the economic side as much as they wanted politically to stay in the deal.

European companies, these private companies, don't really listen to European governments. They don't follow political statements. European companies look at the U.S., the U.S. market, the threat of U.S. sanctions and designations, and they look at the Iranian market, which is much smaller, the amount of trade that they have. So if they have to choose between the U.S. and Iran, many of them actually went with the U.S. naturally and pulled out of Iran or cut their trade or their investment. So Iranians see that the economic loss wasn't made up. They waited, as they call it, strategic patience for a year. They waited, as they call it, strategic patience for a year.

And now it seems like they want to push the limits slowly, not complete pull out of the deal, but they want to push the limits and to give a deadline as a bargaining chip to the Europeans to make up for that economic loss. The EU rejected an ultimatum from Tehran, giving European powers 60 days to come up with a plan to shield Iran's economy from the impact of U.S. sanctions. But then at the same time, they want to remain in this deal and they want to make it very

calculated and strategic to be able to return to where they were if they see the benefits coming from Europe. You mentioned that this announcement over low-enrichment uranium stockpiles is likely a negotiating chip with the Europeans. But is it possible that this is just the first step, right? Like that we could see Iran pushing and pushing and then, you know, at some point completely obliterating the 2015 deal. I don't think at this point the Iranians are aiming for a nuclear weapon. The calculation in Tehran is that the costs of even moving towards a technology

of being able to produce a nuclear weapon has been, the cost has been so high for them and the worry has been so international and widespread that they decided to abandon it and put limits to ensure that they will never pursue any kind of weapons program. But then at the same time, we have to remember that the worry is not just the U.S. worry. The Europeans are also very concerned with not just Iran having nuclear weapons, but the whole Middle East, they don't want anybody in the Middle East to basically join a nuclear arms race. And if Iran

ever starts a weapons program, other countries, Saudi Arabia and others will want to join in as well. And so but what the critics of President Trump, and this is not just the Europeans or other signatories of the deal, this is even people, prominent figures within his own party here in the Republican Party at the US Congress, what they have been criticizing him

when he decided to pull out of the deal is that you don't have a replacement. You don't have an alternative. This might not be a perfect deal from your viewpoint. It might not be a perfect deal from many other parties' viewpoints. But this is what we have right now. This is what the Iranians agreed to. Yes, there are sunsets, there are limits, there's a deadline. But this is what we have. And unless you have something to replace it with and you have a strategy, don't just unravel this and don't just destroy this. And we see where we are now.

It's high tensions, no replacement for the deal, and everybody trying to save what's remaining of the actual nuclear pact. Today, Iran's foreign minister, Javid Zarif, said the next step would be enriching uranium beyond the 3.67% needed for civilian energy. Because we never accept to yield to pressure, but if someone respects us, they will enjoy our respect in return. We will make the world talk to us only with respect. But we talked about at the beginning of this conversation that this could this could actually be the strategy from President Trump to try and pressure the Iranians to come back to the table for a better deal. This definitely seems to be his strategy and I don't

think it's going to be a successful strategy. What everyone was telling President Trump is to keep this imperfect deal and then use it because the deal is not just a deal, it's a diplomatic mechanism. There's all kinds of meetings, frequent meetings between diplomats of the signatories of the deal. Just use this platform, use this mechanism to build on more deals on top of this. It's a nuclear deal. And then people were talking about Iran's missile program, Iran's presence in the region, all of these other areas which the United States is worried about. And some of them are shared by their European allies. What they were telling President Trump was to, without destroying this, to basically use it to get more and, of course, offer more.

France has been since the beginning committed to the nuclear agreement that we signed and negotiated. This agreement is not sufficient, and we intend to improve it after 2025, but our first objective is to uphold the landmark 2015 JCPOA agreement. But he has decided to just take on his strategy without offering more to the Iranians, just taking this off the table and thinking that it would bring them back to a negotiation for what he calls a

better deal. I don't think that's going to work with the Iranians from what we've seen in the past. Only pressure has not made them yield. Nagar, thank you so much for this conversation. Thanks for having me. Before I let you go today, just an update on the reaction to Iran's decision to increase its stockpile of low-enriched uranium. Well, a spokesperson for the UN on Monday urged Iran to honor its commitments under the 2015 nuclear deal, while the remaining signatory, those are Britain, France, Germany, Russia, and China, look for ways to save the deal and deliver sanction relief initially promised. That's all for today. I'm Jamie Poisson. Thanks so much for listening to FrontBurner. For more CBC Podcasts, go to cbc.ca slash podcasts.

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