To the surprise of many economists, sanctions seem to be having a serious impact on the Iranian economy. With the unofficial exchange rate of the Iranian rial down by more than two-thirds since the beginning of the year, inflation approaching 30 percent, and demonstrators appearing again on the streets, the crunch is apparently awakening opposition within the ruling elite to the lame duck president (and perhaps his nuclear ambitions.)
But it doesn't quite follow that the sanctions are succeeding. The Iranian economy was a mess before the sanctions began to bite, which makes it difficult to untangle their effects from the impact of ongoing mismanagement. Moreover, success requires a negotiated end to Iran's nuclear ambitions, and it's unclear whether sanctions will weaken the regime's resolve or serve as a rallying point for anti-Western paranoia. Last but not least, it's important to remember that trade and investment sanctions are, by their very nature, scattershot weapons. They will be felt less by Iran's military-ecclesiastical complex than by ordinary people.
Social scientists have generally been skeptical about the value of international economic sanctions. And for good reason: Their track record is mixed, at best. The classic analysis, made by 1997 by Gary Hufbauer and colleagues at the Peterson Institute for International Economics, concluded that sanctions were successful roughly one-third of the time, with better odds if the goals were modest -- i.e. if the goal was practical policy change rather than regime change. But that figure was considered too conservative by Robert Pape, a political scientist now at the University of Chicago, who reviewed the Hufbauer findings and decided that only four percent of the cases had been successful.
Note, moreover, that "success" is a term of art, with ideology, politics and economic interest muddying the waters in most cases. Take the example of U.S. sanctions against Cuba. Though in place for more than half a century, they have obviously not toppled the Castro government. Nor, with hindsight, did they ever have much chance of felling Castro, since Cuba never lost its ties with Europe, Canada, and most of Latin America. Indeed, sanctions may have entrenched hardliners by making it easy to blame Cuba's economic woes on outsiders.
Sanctions have a way of making both the left and right uneasy. The Left object because sanctions are often directed against anti-Western popular governments, and are likely to produce a lot of collateral damage. The Right doesn't like sanctions because trade and investment are thought to be liberalizing influences in the long run, and because they often hurt Western exporters. That's why Richard Nixon opened the door to China -- or at least how conservatives rationalized the policy reversal after the fact.
That said, what do we know about the impact of sanctions on Iran? In many ways, the country seems the ideal target. More than 80 percent of its exports consist of oil. And while petroleum is an anonymous commodity that is typically shipped on supertankers registered under shadowy flags of convenience (Panama, Liberia, and even Tuvalu), the West does have the means to disrupt the trade. Supertankers need insurance to operate, and, in the wake of the European Union's decision to enforce sanctions, the only insurers willing to cover tankers transporting oil from Iran seem to be an Iranian company with modest financial credibility and, for the moment, government-backed insurers in Asia.