Silent Fury: U.S. Sanctions & Iran’s Economic Landscape

Abstract

The economic effects of U.S. sanctions concerning trade and investment on Iran since the days of the Iranian Hostage Crisis of 1979 have been significant, primarily impacting domestic production, altering trade relationships, and reducing foreign investment. The major research question is: What are the economic impacts of United States sanctions on Iran, and how did they change domestic production, trade, and foreign investment? The investigative method used a combination of quantitative analysis using macroeconomic trends and qualitative research from policy documents and stakeholder interviews. Results indicate that United States sanctions spurred the economic decline in Iran in the short run; rising inflation, reduced foreign investment, and alteration of trade partners. However, Iran weathered the adverse effects by cultivating domestic industries and establishing new international ties. The study suggests that sanctions can maintain viable impacts on the economy of the target in the short term; however, the longevity of those impacts is dependent on the ability of the target to resist. These results may have major implications for policymakers attempting to use economic sanctions as a tool of statecraft.