There can be little doubt that the administration’s “maximum pressure” policy is inflicting considerable economic harm on Iran. Economic growth that followed the lifting of sanctions in 2016 has given way to an inflationary recession. The Iranian currency has lost two-thirds of its value, as oil exports have dropped by more than half and will likely fall further still. Although food and medicine are exempt from sanctions, lack of access to the global financial system is giving rise to a humanitarian crisis. Some families have not been able to eat meat for months and are suffering from shortages of specialized medicine.
To date, however, there is no sign that either Iran’s regional policies are shifting or its leaders are willing to come back to the negotiating table and submit to the Trump administration’s demands. Nor is there any hint that economic hardship has triggered popular unrest of a magnitude that would threaten the regime’s survival. In the absence of any visible shift in Tehran’s political calculus, Washington is presenting the sanctions’ impact by no metric other than their quantity and severity.
There appears to be a belief among U.S. policy makers, almost congealed into doctrine, that Iran will cave to nothing less than massive pressure, a point it clearly has not reached. With U.S. elections at the end of next year, the administration is therefore responding to Iran’s refusal to concede defeat by doubling down, and it’s going about it in a hurry. It has resorted to the unprecedented steps of designating a state entity, Iran’s Islamic Revolutionary Guard Corps, a “foreign terrorist organization,” and of trying to push Iran’s oil exports to zero almost overnight.
This policy is unlikely to succeed for three main reasons.
First and most important: The one thing Tehran would find more intolerable than the crushing impact of sanctions is raising the white flag because of them. Convinced that Trump’s national-security team is bent on toppling the Islamic Republic, the Iranian leadership views economic sanctions as just one in a range of measures designed to destabilize it. Its counterstrategy can be summed up in two words: Resist and survive. The mere act of survival would constitute victory, however pyrrhic.
Tehran believes it has history on its side. Neither besiegement nor prolonged economic suffering is new to Iran’s rulers or its people. They have previously witnessed nearly half of the country’s oil revenue evaporate during the Iran-Iraq War in the 1980s, again during the Asian financial crisis in 1997, and a third time as a result of the European oil embargo and U.S. sanctions in 2012. They know how to get around sanctions and keep state and society afloat.
Second, Tehran feels compelled to prove to U.S. policy makers the bankruptcy of their belief that severe pressure can force Tehran to yield. Iran may have sued for compromise when it faced potential existential threats in the past, but strategic gain outweighed the cost each time. In 1988, Ayatollah Ruhollah Khomeini reluctantly declared that he would “drink from the poison chalice,” agreeing to a cease-fire with Iraq. But when the guns fell silent, after having suffered hundreds of thousands of casualties, Iran had managed to consolidate the young republic’s rule without losing an inch of territory. A similar logic applied in 2003, when after the U.S. invasion of Iraq and, separately, the exposure of Iran’s secret nuclear activities, Tehran pushed the pause button on the nuclear program, lest it become the next target for regime change, and proposed a grand bargain to Washington. Nothing came of what was essentially an invitation to dialogue, in part because the Bush administration’s Iraq adventure proved a strategic disaster.