HONG KONG -- "We have been trading with Iran for 500 years and the only barrier has been a strip of water. Why would we stop now because someone across the ocean demands it?" a top local banker asked me rhetorically during my recent stopover in Dubai on my way to Iran. The two-way trade between the UAE and Iran is estimated to be around U.S. $15 billion and in reality is twice as much since this does not account for the enormous informal sector. Contrary to what many have come to believe, U.S. sanctions on Iran are not as crippling as they are made out to be. Unlike many of its neighbors who are almost entirely dependent on oil, Iran is a diversified economy with a functioning manufacturing, agricultural and service sector, albeit inefficient due to sanctions and inadequate investments. The World Bank classifies it as an "upper middle income" country and despite sanctions Iran, with a GDP of $415.3 billion, is still the second largest economy in the Middle East and North Africa region. Average life expectancy (74 years) is almost as good as any in the developed world, and when it comes to primary school enrollment, Iran is leagues ahead of its neighbors. But, if anything, the Iranian people are resourceful and creative. They get around the problem through ingenuity and enterprise. A thriving currency market in the bazaars of Isfahan allowed me to exchange as much cash as I wanted for my travel and shopping, and sellers were happy to accept the Hong Kong dollar, renminbi and the yen. Carpet merchants, hoteliers and even taxi drivers are ever ready to swap foreign currencies for the riyal. Bank Melli Iran even issues pre-paid "cash cards" that allow tourists to swipe transactions just as they would in Hong Kong or Singapore.
The sanctions make those of us who are rich even richer and those who are poor even poorer.
This is not to say that sanctions do not hurt. Inflation has hit the pockets of ordinary Iranians, and the collapse of the Iranian riyal, which has fallen by 57 percent of its value since early 2012, has made imports more expensive. By eliminating market competition and leaving what little room there is for international trade to a very restricted list of individuals and organizations, sanctions have created huge inequalities in Iranian society. As one wealthy Iranian told me, "the sanctions make those of us who are rich even richer and those who are poor even poorer." So if sanctions are ineffective, then why are they still in place? This comes down to what former French President Valery Giscard D'Estaing called the "exorbitant privilege" granted to the U.S. via the Bretton Woods agreement. He used this to describe U.S.' unique ability to dominate the global financial system by virtue of the greenback being the global reserve currency. That extraordinary primacy of the greenback has allowed Washington to extend the notion of exorbitant privilege to exercising arbitrary force on those who dare not to play by its rules. But the beneficiaries of the sanctions are many. These include the Gulf states, who are very aware of the windfall the sanctions on Iran gives them, and it is easy to see why they are beseeching Washington not to relax them. The motivations are probably more economic than sectarian. As the Dubai banker explained: "Iranians have a lot of money locked in Gulf banks, businesses and real estate. Guess what happens to all those shiny glass and marble shrines once Tehran rejoins the international financial system?"
What he implied was that much of that economic power could readily move to more fertile ground with a much larger consumer base. If the sanctions were lifted, the "music," at least for the Gulf states, could possibly slow down. But that might not be a bad thing as spreading the wealth in the region will create healthier competition and importantly help bring much needed political stability as commerce and trade expands. It will also unleash the untapped human capital of the largest and most educated pool of young people in the region -- and that would include women who outnumber men in universities in Iran. So just how unfair is it for the world to let one nation have the exorbitant privilege to punish others just because it has an old axe to grind? No other country has been granted this, and it is about time the world took ownership of this "license" so that it is not abused.
You can drive the length and breadth of the U.S., but you will not find a single place with anything like the culture you will find at Imam Square. Why do they think we will bow to them?
Why? Successive U.S. administrations have shown the world repeatedly how badly it takes setbacks and seeks to punish others without global support. More than three decades have passed since the U.S. embassy hostage crisis, but that incident continues to color how American foreign policy frames Iran. For most Americans, Iran is a hostile place where their diplomats were once held hostage, not a warm and friendly country of about 80 million people and a GDP of U.S. $415.3 billion with whom they should have strong ties. Most Americans are either ignorant of or refuse to acknowledge that American and British conniving to protect oil interests thwarted Iran's first attempts at democratization in 1953.
On the humanitarian front, the tightening of the sanctions has resulted in serious shortage of lifesaving drugs, vaccines and other key medical supplies in the country. A much tougher sanctions regime on neighboring Iraq after the first Gulf war killed about half a million children under the age of five according to UNICEF. If such reports are anything to go by, then it is clear that sanctions did the same in more heavily populated Iran. But politicians in the West have become so trapped in this game of charades that even a threat to the lives of hundred of thousands of babies barely stirs their conscience. It would appear no price is high enough to pay to punish Islamic theologians whose worldview is not shared by the West.
But Iran is more than the simplistic image many in the West -- in their fear of Islam -- have of the country. To stand in the middle of Imam Square in Isfahan is to stand in awe of a culture that predates the arrival of the first pilgrims on the shores of North America. The Iranians know their place in history. Extremely learned, it is a culture that has developed a highly refined sense of literature, art and architecture. I met a 65-year-old master craftsman, who earns $200 a month investing three years of hard labor trying to fix an elaborately designed silk carpet made by a master weaver whose center was off by a mere two inches. What kind of a culture produces this kind of devotion to perfection? As my Iranian friend who has family in the U.S. told me, "you can drive the length and breadth of the U.S., but you will not find a single place with anything like the culture you will find just here at Imam Square. Why do they think we will bow to them?" U.S. and European negotiators will do well to remember these words of a young businessman and not those of a religious fanatic. They should stroll through the bazaars of Isfahan and Shiraz if they have any second thoughts about inking the agreement with the Iranians. Neither the moderates, nor the hardliners will part with Iran's right to nuclear energy. If they are expected to play their role as responsible actors in global affairs, then they should be respected and trusted as equal partners. It is time for futile and immoral sanctions to go. The poor and weak have already paid an exorbitant price.