The Effects of Trade and Financial Sanctions on Iranian Economy: A Historical Analysis

Economic sanctions are known as a tool for political objectives. After the victory of Islamic Revolution of Iran in 1979, the United States has applied different sanctions against Iran frequently. This paper assesses the effects of trade and financial sanction on Iranian economyin 2000. Results show that the US sanctions have had some economic successes because of damaging Iranian economy.Trade sanctions effects on Iranian non-oil exports and capital goods imports have been more serious than its oil exports sanctions effects. Iran can find other buyers for its oil in a short time because of oil is a fungible commodity and world oil market is a comparative and expansive market.Financial sanctions have more effects on Iran than trade sanctions.By virtue of financial sanctions, Iran pays higher rates of interest on its loans and has guaranteed excessively high rates of return for the investment in its oil buyback projects. In final analysis, Iranian trade and financial sanctions costs have been estimated about 1.1 percent of Iran’s GDP by consumer surplus approach. In this case, it shows that unilateral sanctions on crude oil imports are ineffective because of its fungible nature and comparative market.So it can be concluded that financial sanctions and export sanctions of some Iranian commodities can cause the same conditions like comprehensive sanctions. If sanctions apply smartly and with the cooperation of other countries, Iranian economy will be incurred politically and economically.