David R. Henderson  

Paul Pillar on Iranian Sanctions

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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.
This is from Paul R. Pillar, "Iranians and Their iPhones, and the Futility of Sanctions," The National Interest, August 26, 2017.

Pillar does a beautiful job in a short space of pointing out some of the consequences of U.S.-government-imposed sanctions on Iran.

Excerpt:

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.


And an unintended, but totally predicable, consequence:
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.

I have written about such consequences here and here, to name two of the many places I have written about them.

HT2 Antiwar.com


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COMMENTS (1 to date)
David Seltzer writes:

David, no surprise policy makers ignore economics 101, in spite of the empirical evidence. I suspect, because they have the biggest stick in the school yard, they believe they can bully whomever they please.

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