The Mindless Harm of Economic Sanctions

American politicians love to hurl economic sanctions at disfavored governments, but the current labyrinth of sanctions is so complicated that it has unintended consequences, as ex-CIA analyst Paul R. Pillar explains.

By Paul R. Pillar

U.S.-imposed economic sanctions often have been misdirected and counterproductive, but a new sanctions-related development involving Iran is especially illustrative.

Iranian women attending a speech by Iran’s Supreme Leader Ali Khamenei. (Iranian government photo)

First, some background. Iran has been a favorite target of American politicians who use sanctions as a vehicle for expressing disapproval for a regime, with little apparent thought about the actual effects of the sanctions. Since the entering into force of the nuclear agreement known as the Joint Comprehensive Plan of Action, which in the eyes of most governments successfully resolved the issue of a possible Iranian nuclear weapon, the United States has been alone among major powers in continuing to sanction Iran.

The sanctions that the United States has piled on Iran for years have become so extensive and complex, and the penalties for violation so severe, that many American companies have erred on the side of caution by forgoing business opportunities in Iran even more than is legally required. The fear of God, or rather of the U.S. Treasury Department, has made them wary of inadvertently stepping across some unclear line.

The new development is that Apple is attempting to shut down apps developed by Iranians for use on iPhones inside Iran. The sanctions prohibit Apple from selling its phones in Iran, but millions of the popular devices have been smuggled into the country from places such as Dubai and Hong Kong. Hence the market for apps that Iranians find useful, such as an Uber-like ride-hailing service known as Snapp. Apple is removing Iranian-developed apps, including Snapp, from its App Stores. The company issued a message to Iranian developers in which it attributed the move to “U.S. sanctions regulations.”

That Apple’s move is the result of an abundance of fear and caution is indicated by Google taking a different tack. Google has done nothing to remove Iranian-developed apps for Android phones from its Play store, and it permits Iranian developers to publish their apps in Iran provided that they do not involve purchases.

Maybe Google is on firm legal ground. But with the American political impulse to keep imposing still more anti-Iran sanctions, and with a resulting system of sanctions that is so complicated it can be fully understood only by a few experts in Treasury’s Office of Foreign Assets Control, many companies will take Apple’s more cautious approach.

No Benefits

Impeding the full use by Iranians of their iPhones does absolutely nothing to weaken the Iranian regime, to punish it for behavior we don’t like, to deter it from future behavior we might not like, or to accomplish any other ostensible purpose of the sanctions that have led Apple to do what it is doing. It only takes ordinary Iranians farther away from fully enjoying an American product with an American operating system, and it stimulates a turn to Iranian alternatives such as an internal Iranian online payment system.

As with many of the U.S. sanctions, the overall effect on the Iranian economy is to weaken portions of that economy that are outside the regime and to strengthen the regime’s influence over other parts, including the economic activities of the Islamic Revolutionary Guard Corps.

An instructive irony of Apple removing apps that ordinary Iranians use is that recently Apple removed apps that ordinary Chinese were using to circumvent government censorship and gain use to non-Chinese internet sites. The Iranian regime, like the Chinese regime, blocks the use of some popular Western-based social media (although the Iranian telecommunications minister has hinted that some of these restrictions may be dropped). The difference is that in one case Apple is responding to pressure from the Chinese government, while in the other case it is responding to pressure not from Iran but instead from the U.S. government.

Meanwhile, the sanctions mean more lost business for American companies. While Apple is prevented from selling its phones in Iran, one of its biggest competitors, Samsung, opened earlier this year a large sales center in Iran.

Paul R. Pillar, in his 28 years at the Central Intelligence Agency, rose to be one of the agency’s top analysts. He is author most recently of Why America Misunderstands the World. (This article first appeared as a blog post at The National Interest’s Web site. Reprinted with author’s permission.)

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38 comments for “The Mindless Harm of Economic Sanctions

  1. lizzie dw
    September 2, 2017 at 1:43 pm

    In my opinion our elected officials are shooting our country in its own foot. One might think of encouraging one’s children to learn Chinese or Russian or Farsi – languages of countries that seem to be in the ascendant, not the decline. If you look at the world news, representatives of middle eastern, eastern and european countries are visiting each other, making deals for trade, transportation and buying stuff from each other. We, on the other hand, are imposing more and more complicated sanctions to prevent this, some of which are illegal, but all of which are spoilers. We make no attempt to enter into trade. So I feel bad about this but, on the other hand, go
    “if not west – than anywhere there is work – young man”.

  2. Susan Sunflower
    August 29, 2017 at 6:39 pm

    as I’ve said, Trump is a moron …

    Business Insider (also CNN): “‘I want tariffs’: Trump is reportedly pushing hard for a policy that could start a trade war
    http://www.businessinsider.com/trump-tariffs-trade-meeting-2017-8

    Cheap Chinese goods helped keep “wage stagnation” largely subliminal … the other factor was credit … see the unprecedented American household debt load (again!!!) …. crash?

  3. Herman
    August 29, 2017 at 9:05 am

    “Maybe Google is on firm legal ground. But with the American political impulse to keep imposing still more anti-Iran sanctions, and with a resulting system of sanctions that is so complicated it can be fully understood only by a few experts in Treasury’s Office of Foreign Assets Control, many companies will take Apple’s more cautious approach.”

    The mention of the Office of Foreign Asset control should recall the vicious impact of its actions against Iraq. It’s actions were the cause for the conversation with Madame Albright, who when asked about their resulting in the deaths of a half million Iraqi’s said that in pursuit of our righteous cause, they were worth it.

    It has taken years for our “adversaries” to adjust, but adjustment was inevitable and let’s hope their impact becomes counterproductive since their effect as noted hurts the innocent more than our supposed target. I think our leaders knew that but went ahead anyway in the hopes that all the suffering would destabilize or overthrow regimes. Cold hearted? Criminal? You bet.

  4. mark
    August 28, 2017 at 5:40 pm

    40% of humanity is now under US sanctions. Americans need to get their jackboot off the neck of humanity or one day soon they’re going to be on the receiving end. What goes around comes around. This may happen a lot sooner than anyone thinks, without warning. The world is becoming a lot more unstable and turbulent. Systems can lose legitimacy overnight. Just watch the news with the sound turned down. Riot after riot after riot in America and Europe. Nobody is in control any more. Things are falling apart at the seams.

    • Lois Gagnon
      August 28, 2017 at 10:17 pm

      Right you are. And the band played on.

  5. delia ruhe
    August 28, 2017 at 1:07 pm

    The US has become very proficient at shooting itself in the dick.

  6. August 28, 2017 at 12:56 pm

    Has the Pentagon Taken Over US Foreign Policy inAfghanistan? (1/2)
    TRNN senior editor Paul Jay asks Col. Lawrence Wilkerson if arms manufacturers are driving foreign policy and if Trump’s strategy for the war in Afghanistan …
    THE REAL NEWS • AUGUST 25, 2017

    http://www.unz.com/video/therealnews_has-the-pentagon-taken-over-us-foreign-policy-in-afghanistan_1/

  7. exiled off mainstreet
    August 28, 2017 at 10:00 am

    The end result of the sanctions is likely dedollarisation, since that eliminates the power of them, and also eliminates other aspects of yankee power. I don’t know what the economic endpoint will be. Also, sanctioning China or Russia or economies with the ability to attain autarky could also impact the yankee economy since, without yankee dominance of the technology field, they can develop other technologies independent of the yanks which may be more effective.

    • Susan Sunflower
      August 28, 2017 at 1:46 pm

      already have — China dominates solar and nuclear power plant replacement contracts (at $ billion or more each) … the myth of “private enterprise” loses its luster when competing with government assisted R&D (see also the American space program and its “fruits”) — we won’t even talk about the government funded infrastructure on which “private enterprise” relies …

      • Susan Sunflower
        August 28, 2017 at 1:52 pm

        The space program was a not-entirely-covert “Manhattan project” like (unlimited budget) military push to control (and militarize) space …

  8. Michael Kenny
    August 28, 2017 at 9:52 am

    “U.S.-imposed economic sanctions often have been misdirected and counterproductive, but a new sanctions-related development involving Iran is especially illustrative”. Has anybody any idea what other “misdirected and counterproductive” US-imposed economic sanctions the Irainan sanctions mentioned here might be “especially illustrative” of?

    • Susan Sunflower
      August 28, 2017 at 11:45 am

      you apparently stopped reading at that point … go back and finish reading the article … it’s quite clear.

  9. Realist
    August 28, 2017 at 7:19 am

    If actions such as these economic “sanctions” were carried out against targeted groups or individuals within the borders of the United States it would be called extortion, blackmail, exaction or racketeering and would be a serious felony. It would be called “restraint of trade” under the law subject to prosecution and severe penalties. But it’s okay for the American government to do so because the victims are foreign countries or foreign nationals with whom we are not formally at war? Washington simply proves to the world that it is an amoral gang of international criminal thugs.

    If we are at war with Russia, Iran and North Korea, those countries can sink our ships or shoot down our planes at will in defense of their interests. We have de facto committed a first strike with these sanctions, while they have done nothing against the U.S. except engage in rhetoric. Maybe all these sanctions are meant to be a provocation to hot war, the prevention of which, I believe, is why Trump was elected. If we are at war with these countries, the American government should have the decency to apprise its own citizens of this fact so we can take the necessary actions to throw them out of office.

  10. mike k
    August 28, 2017 at 6:49 am

    The capitalist warmonger’s tentacles reach everywhere……

  11. Tom Welsh
    August 28, 2017 at 4:30 am

    Obviously, Iranians should simply stop buying and using iPhones – or any other Apple products. They are over-priced and parasitic on near-slave labour.

  12. August 28, 2017 at 12:35 am

    Economic sabotage is the goal. Create problems, augment obstacles, exploit weaknesses, incite unrest through NGO community organizers, have snipers shoot some people at an opposition rally, arrest popular leader, insert puppet “good” dictator … grant development aid loans in US funny money to be repaid in oil, and other raw wealth. That is the plan for Venezuela, Iran, China, and Russia.

    • Joe Tedesky
      August 28, 2017 at 1:24 am

      Some of what you mentioned there sounds like some of the stuff that’s starting to happen right here, at home.

      Is it worth it to add to your list, how the Empire hates being mimicked? The Empire is the one and only meddler, and never to be a meddlee. Still that doesn’t matter, because the Empire will just make shit up anyway.

      You are right Common Tater, what you mentioned here, is our country’s real foreign policy.

      • Susan Sunflower
        August 28, 2017 at 1:33 pm

        neoliberal economic policies functionally blur the lines defining “corruption” versus “the cost of being competitive” … rather than “all is fair in love and war …” it’s become a “by any means necessary” justification of corruption in pursuit of profits.

        The history of the private militia companies — like Blackwater — created to serve US multinational corporation “security” needs in corrupt countries (without calling on the U.S. Government/military which would have been under congressional purview) is interesting … eventually those “private armies” and their “efficiencies” and freedom to act largely without oversight became “enviable” … with the expansion of Jsoc and the contracting of services to them … Afghanistan presidential security detail (and other high level targets) was contracted — iirc — to Blackwater or something like it.

    • Realist
      August 28, 2017 at 9:11 am

      To expand on your list, Mr. Tater: …embargo food and medicine needed by kids sick with cholera in Yemen. Deliver missiles and bombs from USAF jet fighters instead. It’s worth it. Ask Madeleine Albright. Look, if Allah wanted the Yemenis to win American support on the battlefield they’d have the petrodollars, not the Saudis.

  13. Zachary Smith
    August 28, 2017 at 12:25 am

    The new development is that Apple is attempting to shut down apps developed by Iranians for use on iPhones inside Iran.

    Unbelievable. This guarantees I will not be purchasing any Apple product under any circumstances I can imagine. Indeed, after reading this I wouldn’t take a free Apple phone if that meant I had to retain and use it. Nor Apple software. I removed the Safari browser last year from my Windows computer and have never been tempted to acquire it again.

    The Big Corporations imagine that when somebody shells out piles of money for a product, they’re only “renting” it while the Big Corporation retains full control. John Deere doesn’t allow farmers to repair their own tractors because all the engine software is “proprietary”. Amazon Kindle books aren’t generally expensive, but I simply refuse to pay money for something I don’t own. Something that Amazon can and has removed from people’s devices whenever it pleases.

    An instructive irony of Apple removing apps that ordinary Iranians use is that recently Apple removed apps that ordinary Chinese were using to circumvent government censorship and gain use to non-Chinese internet sites.

    In this instance Apple is behaving exactly like a wealthy whore who wants to make even more money by “servicing” the Chinese government.

    • Susan Sunflower
      August 28, 2017 at 3:47 am

      I’ve been wondering at what point all of these significant pending criminal accusations against Trump and Company wrt money laundering run into what has been significant “blind eye” and/or criminally lax enforcement of those same laws and regulations.

      The reason there were so few American companies listed in the Panama Papers was because “we” allow all sorts of doing-business-as and off-shoring (regardless of the fist-shaking faux righteous anger shown during some election campaigns about corporate tax evasion).

      In unpacking a legal case against, say, Paul Manafort or Trump Towers, I suspect they’re likely to be naming all the usual suspects from the “Banking Crisis” … my impression had been that the authorities didn’t care much about Russian money laundering (nor do the Brits) as long as it complied with listed sanctions (who can keep track) and there weren’t too many dead bodies drawing too much attention … Funny how all that excited talk of the “Russian Mafia” in America has faded into background white noise… along with all that alleged human trafficking and other outrages du jour.

      I’ve seen some “scout” articles suggesting that rather than “Russian Hacking” bringing down Trump, it will be “Money Laundering Russian ill-gotten gains” … investigations of this sort usually embarrass some very big fish of the too-big-to-fail vareity. should be educational. Wonder how long before the “bright kids” like Maddow realize that this can of worm might come with paper trail “evidence of wrong doing” but raises inconvenient questions.

      • Dave P.
        August 28, 2017 at 12:41 pm

        Susan: That is how most of the London had been built from “Ill-gotten gains” from all over the World, and that is how it is now. This loot from Russia in hundreds of billions (some estimates are well over a trillion) of dollars during 1990’s, and at the beginning of this century was distributed all over – U.K., U.S., France, and elsewhere. Quite a bit of this loot came to the West Coast in California where a large number of Russians (mostly Jews) came to. That recently looted country is under attack again – a perfect target with all their natural resources.

        I sometimes think these countries like Iraq, Iran, Venezuela and many other countries, who can not defend themselves are rather unfortunate to have all these resources. They would have been better off without these resources – people there would have been somewhat safe from the deadly fury of The West.

  14. Lois Gagnon
    August 27, 2017 at 11:30 pm

    When ever I hear of sanctions being imposed on another country for what ever barely disguised imperialist geopolitical reasons are trotted out, I am reminded of the 500,000 Iraqi children under the age of 5 who died as a result of sanctions. What did those poor children or their parents ever do to us to deserve such a horrid fate?

    Sanctions are an act of war and should be declared illegal under international law.

    • Sam F
      August 28, 2017 at 10:32 am

      Yes, we need to accept economic coercion, outside of the framework of international law, as a form of war. This would remove any constitutional basis for foreign sanctions, except under treaties, which should require this to be an act of defense. But the US not only refuses to sign the Treaty of Rome to accept the ICC jurisdiction, and is the only nation with a law to militarily attack the Hague if any of its citizens are prosecuted for war crimes.

      Accepting economic coercion as an act of war would make substantial direct or indirect bribery of US officials an act war, allowing prosecution and removal of corrupt officials.

    • SteveK9
      August 28, 2017 at 11:48 am

      Let’s face it. There is no international law when the strongest country refuses to abide by it. If someone makes war on you, don’t whine about international law, act. Venezuela should be moving as fast as it is able to align itself with Russia and China, the only two countries in the World with the will and the ability to resist US domination.

      • Sam F
        August 28, 2017 at 6:33 pm

        Yes, Venezuela needs to attempt that. Alignment with Russia or China would be an enormous change in the hemispheric balance of power. If linked to foreign trade, and the Panama or Nicaragua canal developments, it would open a new chapter in diminishing US hegemony, taking the game to the US sphere of influence.

        Perhaps the purchase of SAM batteries from Russia, surveillance and weapons for the Colombia border, and equipment to prevent a naval embargo.

        This would assist the US in ousting its warmongers, by showing that the bully finally meets his match.

  15. SteveK9
    August 27, 2017 at 11:23 pm

    Much more important is that economic sanctions are leading countries like Russia and China to consider and set up alternative international finance systems, which will be joined by increasing numbers of other countries. The US gains enormous benefit and power from its control of international finance. But, overuse of that power means it will eventually be eliminated. The economy of China is now large enough to begin to push back against the dominance of the dollar in finance.

    • Zachary Smith
      August 28, 2017 at 12:34 am

      The US gains enormous benefit and power from its control of international finance. But, overuse of that power means it will eventually be eliminated.

      Years ago when I first encountered the Internet I read an essay claiming that Dollar Hegemony amounts to a tax on the entire world, and the sums transferred to the US economy amounted to around $5,000 for every single US citizen. That’s from memory and I can’t locate any numbers now. But as you say, the numbers involved must be enormous.

      By pulling numbskull stunts like this latest Sanctions bill we’re forcing the rest of the world to react, and one of these days their reaction is going to cause an economic downturn here. A bad one, too.

      • Joe Tedesky
        August 28, 2017 at 1:05 am

        Yeah, like don’t bite the hand that feeds ya.

        Or, if your old enough to remember when back in the eighties the infallible Coco Cola replaced the original Coke Classic with the ‘New Coke’….although these corporations weren’t playing with nukes, the hubris is all the same.

        I won’t charge ya the usual nickel I charge for taking you the long way around the barn, but I’ve met me quota this day directing people to the facilities room for a quarter…. sorry, it’s late.

        You got a point Zachary

        Ps I’m killing time while my comment goes through moderation…is moderation anywheres near Langley?

      • SteveK9
        August 28, 2017 at 11:46 am

        In the long run it will be a very good development for us. We won’t be able to finance all of these horrible foreign interventions, and we will have to make some things again.

    • john wilson
      August 28, 2017 at 4:19 am

      You are right SteveK9, and that’s the very reason the Yanks had Gadaffi murdered, because he was about to start a pan African currency which would rival the dollar. Murdering Gadaffi was easy, but the Yanks won’t find it so easy to murder the head of state like China or Russia. The inevitable result of sanctions is for those being sanctioned to seek out goods and services elsewhere.

      • MEJanssen
        August 28, 2017 at 5:12 pm

        john wilson, we keep trying to assassinate Putin, but he leads a charmed life. At least, I hope so, for Russia’s sake.

  16. August 27, 2017 at 11:17 pm

    It’s doubtful that sanctions have any significant effect on Iran or any other nation as long as most of Europe and China realize they are not to their benefit. They may well become more vocal in their opposition to the heavy-handed American policy the more they become aware that it is not in their interest.

    • Susan Sunflower
      August 28, 2017 at 11:41 am

      One of the factors in Chinese investment and development in “third world nations” has been that China, unlike the United States, is “all about business” without the “strings attached” of similar American aid, be it “human rights” or “family planning” or quid pro quo favored nation / singe sourse type issues. Again and again in Iraq post-invasion redevelopment, American aid demanded replacing high cost technology “from scratch” with made-in-the-USA because the existing hardware were Russian or even simply French or German … compatibility issues abounded. Very American extravagance to replace-rather-than-repair and then make the country dependent on American made parts and technicians… although increasingly made-in-the-USA has been recognized as less practical and/or reliable … the rebels want their Kalashnikov. (Although ubiquitous and made in many countries, apparently the first American manufacture is due to begin this year)

      We lost both the solar panel industry (in which we had decades of technological lead and market dominance) and nuclear power plants to China … no longer solely about “cheap labor”… see also foreign competitors having open markets with countries where we self-limit/censor leading to smaller markers and less real-world feedback/incentive for innovation ..

      Will Samsung get a leg-up to becoming competitive with the I-phone in a global market? I haven’t seen any updates on the market impact of the inclusion of spyware in American made windows-based computers. It took only a few months during Arab Spring for Facebook to loose its luster as an organizing tool when its surveillance and propaganda (fake-news) potential was recognized and governments rushed to purchase the available “hacking” and de-encription technology … also, irrc, made-in-America… the better to stiffle free expression and round up the dissidents.

      • August 29, 2017 at 8:27 pm

        …interesting… although I have long been rankled over the lost opportunity that gave China the lead in solar energy, the Facebook angle adds a new dimension. However, I suspect(and hope)that rebellious techies in the software industry will not just sit by and allow the product to include spyware without going public in some manner(thus averting its globalization). As far as the nuclear industry goes, anyone is foolish to take that direction with all the risks(i.e.Fukushima) plus cost. In my estimation there can be no “peaceful” nuclear energy. Renewables have made so much progress in the last few years that only the resistance of the fossil fuel industry has impeded further implementation.

  17. Joe Tedesky
    August 27, 2017 at 11:17 pm

    Sanctions not only hurt the country or countries being sanctioned, but these same sanctions imposed on the targeted nation also hurt American business.

    http://dailycaller.com/2017/07/18/analysts-russian-sanction-bill-could-punish-companies-like-john-deere-and-boeing/

    Everything our country the USA does with it’s foreign policies seems to be done against the best wishes of the U.S.. this sanction trend, makes me recall how George Marshall who was serving as the Secretary of State, was a gasp when Harry Truman recognized Israel as being a state. Marshall then decried this decision of Truman’s as not being in the best interest of the United States. Marshall was thinking of the oil, and no so much about a 4,000 year old myth coming of age.

    So who is pulling the strings? If there is no foreign Oz behind the curtain, then ask yourself why in this new century, does it appear that the U.S. continues to do so much against it’s best interest? With little to no real encouraging results, and between the life’s loss coupled to a 19 trillion dollar deficit spent mostly on the military, then please someone tell me when we may expect to hit pay dirt? I mean we are fighting these wars, and sanctioning who ever it is we are not fighting at the moment, and yet there is no end date, as also there is no financial ceiling to be touched, as the U.S. goes slogging forward in spite of all of what I mentioned.

    I’ll just say this, and then I will end my rant here, tell Netanyahu and the Salman’s to take a hike, and fight their own damn wars.

  18. mark
    August 27, 2017 at 10:31 pm

    It doesn’t matter how much sanctions hurt US companies. The people who impose and administer them are dual nationality Zionist Jews who couldn’t give a rat’s arse about America. To them America is just dumb goy muscle to serve the interests of the Talmudic master race. America is 100% controlled by the Kosher Nostra, from (((Crown Prince Jared and Princess Shiksa Ivanka))), (((Ben Shalom Bernanke, Yellen))) & Co. at the Federal Reserve, Jewllywood, Wall St., the MSM, backed up by their army of 30 shekel whores in Congress. Nobody in America can so much as break wind without the express permission of the Chosen People.

    • August 29, 2017 at 9:49 am

      That sums it up exactly. One more time the tail wagging the dog, and thats the way Israel sees the US as it´s attack dog nothing more. As Adleman and Netanyahu have said on more than one occasion, we will use and take the US for everything that we find useful and when there is nothing else to be gotten from that country it can go to Hell for all we care.

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