Dear John,
Yesterday’s news that Iranian-American dual nationals have been transferred out of Evin prison as a first step to freedom, and that Iranian funds frozen by sanctions will be released for humanitarian purchases is a win-win.
But, predictably, critics like former Trump administration officials Mike Pompeo and Mike Pence (who we recently learned received 100’s of thousands of dollars from the MEK…) lashed out against the news and tried to muddy the waters with falsehoods to create controversy.
Amid such circumstances, it can be difficult to separate fact from fiction. But as I write for Defense One , the freeing of humanitarian funds for purchases of food and medicine is the right thing to do and a smart way for the U.S. to use its leverage to free Americans and actually help ordinary Iranians.
While no silver bullet to address the totality of sanctions and the corruption enabled by sanctions, the arrangement under way is a positive step forward in addressing the humanitarian needs of ordinary Iranians.
You can read my analysis for Defense One [[link removed]] on the linkage between sanctions and corruption, and how yesterday's news can reduce the harms against the Iranian people, below.
We will continue to track developments on the prisoner swap and release of humanitarian funds closely, and work to educate policymakers on the potential benefits of these diplomatic moves in the weeks to come. Please consider supporting this important work by donating [[link removed]] or signing up [[link removed]] as a grassroots volunteer.
Sincerely,
Ryan Costello Policy Director, NIAC[[link removed]]The latest Iran deal is a win-win [[link removed]]
A complicated prisoner swap should ease drug shortages that are killing ordinary Iranians—and put new pressure on Tehran’s leaders.
BY RYAN COSTELLO
POLICY DIRECTOR, NATIONAL IRANIAN AMERICAN COUNCIL
AUGUST 10, 2023
Thursday’s furlough [[link removed]] of Iranian-American dual nationals unjustly detained in Iran appears to herald another multistep U.S.-Iranian prisoner-swap deal. According to reports [[link removed]] , the United States will unfreeze nearly $6 billion that had been held under U.S. sanctions in a South Korean bank and allow it to be deposited into a Qatari bank. The Qatari government will then oversee Iranian requests to use the funds to purchase food and medicine, which are non-sanctionable goods. While critics are already crying foul, such an arrangement is a smart use of leverage and a win-win for the people of Iran and the United States.
Underlying these complicated diplomatic maneuverings is a perverse and entirely preventable reality: life-saving medicine has become increasingly unavailable in Iran, even as billions of dollars in Iranian assets sit frozen in banks across the globe. From specialized medications to treat blood diseases and cancer, to more basic items like cough syrup and antibiotics, drugs that so many around the world take for granted are desperately needed by Iranians. Some 170 to 180 types of medications [[link removed]] are scarce now, a number that is likely to grow, according to Hossein Ali Shahriari, who leads the Parliament’s Health and Treatment Commission. Desperate patients are paying high prices, sometimes traveling long distances, and increasingly turning to the black market to obtain their medicine.
Sanctions are not the only reason that medicine is increasingly scarce, but they are the primary cause. By restricting access to the banking system and hard currency, the sanctions are preventing Iran from obtaining medicine and raw materials [[link removed]] to produce many drugs domestically.
This hasn’t always been the case. The brief period in which the 2015 nuclear deal was implemented brought a sharp reduction [[link removed]] in medicine shortages [[link removed]] . But this changed after Donald Trump withdrew from the deal and sought to impose “maximum pressure” on Iran. In 2018, sanctions expert Elizabeth Rosenberg [[link removed]] noted [[link removed]] : “What’s different is that the U.S. has reimposed the sanctions it lifted pursuant to the nuclear deal and it has layered on many more, including doing things like designating some Iranian financial institutions not previously designated and that were previously used to facilitate food, medicine and medical imports.”
To be sure, the Trump administration took some small steps ostensibly aimed at enabling Iranian drug imports, and the Iranian government has demonstrably failed to prioritize the health and well-being of its citizens. But the artificial economies that sanctions have created have driven corruption to new heights, enabling smuggling networks inside Iran to reap enormous profits at the expense of ordinary Iranians.
Corruption and sanctions are inextricably linked: academic literature on sanctions on diverse countries including Iraq, Yugoslavia, Haiti, and Iran all indicate that sanctions expand the shadow economy [[link removed]] and incentivize the state to engage in corruption and smuggling in sanctioned goods. As the Global Initiative Network wrote in a report [[link removed]] on Iran’s shadow economy, “for criminal networks and state actors, sanctions represent an opportunity to generate huge revenues, which in the case of the state is used to prop up the economy, pay patronage networks and support various proxies in the region.”
Networks linked to the Islamic Revolutionary Guard Corps in particular have benefited from sanctions-created scarcity. Cross-border smuggling operations that netted an estimated $12 billion per year [[link removed]] before the nuclear deal are thought to be generating far more today. Additionally, the gaming of differing government exchange rates by corrupt actors helped drive a shortage of insulin [[link removed]] in 2020.
All this puts U.S. policymakers in a difficult position. Sanctions ostensibly targeting the Iranian state fail to harm the well-connected elite, who find new ways to profit through the shadow economy. But ordinary people are hit doubly: first by the impact of sanctions on the economy as a whole, and second by predatory smuggling networks that raise the price and lower the availability of medicine and other key goods like medicine.
Releasing frozen funds to alleviate shortages of medicine is a smarter way to put pressure on the Iranian government. Deprived of sanctions as a scapegoat for the scarcity, Iran’s leaders must alleviate it promptly or risk renewed mass outrage from its citizenry.
Moreover, Congressional sanctions on Iran all include explicit exemptions for humanitarian trade. Sec. 1245 of the FY12 NDAA [[link removed]] , targeting Iranian oil sales, explicitly says “The President may not impose sanctions…with respect to any person for conducting or facilitating a transaction for the sale of food, medicine, or medical devices to Iran.” By Congress’ own direction, Iran’s restricted funds should be permitted to be exchanged for humanitarian purchases.
Even if other elements of the mutual de-escalation are weighed down by poisonous politics in Washington and Tehran, Biden would be doing right by U.S. interests to free up Iran’s frozen assets for humanitarian purchases and secure the release of Iranian-Americans detained in Iran. In pushing the Trump administration to open up humanitarian channels with Iran during the COVID-19 pandemic outbreak, Biden rightly said [[link removed]] , “Whatever our many, many disagreements with the Iranian government, it’s the right and the humane thing to do.”
The same is true with helping Iranians secure medicine amid massive shortages today. Sanctions relief is the right and humane policy to pursue.
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