Comparing Effects of US Sanctions against Iran and Venezuela during Donald Trump’s Presidency and Analyzing Economic Impacts

Sanctions are a component of the dominant diplomacy in the contemporary world. In fact, the different countries employ sanctions as a means to advance their interests in foreign policy. The United States of America has consistently used sanctions as a method of addressing countries that do not align with its interests. The Islamic Republic of Iran and Venezuela are among the countries sanctioned by the US. Since the onset of the Islamic Revolution of Iran in 1979, the United States has sanctioned Tehran, citing various reasons such as the alleged support for terrorism, violation of human rights, and attempts at acquiring weapons of mass destruction. After years of negotiations and diplomacy between Iran and the world powers, the Joint Comprehensive Plan of Action (JCPOA) was finally signed in 2015. As a result, some US sanctions against Iran were lifted. However, following Donald Trump’s election as the president of the US and his withdrawal from the JCPOA, an order was issued on May 8, 2018 to re-impose sanctions against Iran.Another country under the US sanctions is Venezuela. In fact, the US sanctions against Venezuela began during the presidency of Hugo Chávez and intensified in 2014 with the allegations of corruption and misuse of Venezuelan financial resources. With the election of Nicolás Maduro as the president of Venezuela in 2018 and the beginning of protests against his way of governing the country, the US stepped up its sanctions against this South American country. Donald Trump, who had previously declared his support for Maduro's protesters, attempted to impose restrictions on Maduro’s administration in the political, economic, and social spheres by issuing sanction orders, bills, and laws. The simultaneous imposition of sanctions against Iran and Venezuela raised the following questions: What are the similarities and differences between the sanctions imposed on these two states? Additionally, what impacts have these sanctions had on their economies?

 Theoretical Framework:

Sanctions are classified as limited, moderate, or extensive actions based on their scope and as economic or non-economic decisions in terms of content. Sanction theorists frequently assess the economic impacts of sanctions within the realm of macroeconomic indicators, which encompass factors such as inflation and currency rates, export and import rates, economic growth, unemployment and employment rates, and other significant economic indicators. Furthermore, sanctions can have non-economic impacts on the target country, directly and indirectly affecting its cultural, political, and social values. This study analyzes the economic impacts of the sanctions imposed on Iran and Venezuela with a particular focus on the foregoing categories of sanctions. The key aspect of sanctions is the process by which they can prove effective. In other words, what measures should be taken to enhance the effectiveness of sanctions? In this regard, a conceptual framework was developed in this study to identify several factors that affect the effectiveness of sanctions. These factors include the number of allies of the sanctioning state, the degree of focus on vulnerable areas of the target state, the experience and adaptability of the target state to the applied sanctions, and the type, content, and intensity of sanctions.

This research adopts a comparative approach, which is a scientific inference method that involves systematically juxtaposing similarities and differences among social phenomena, whether for descriptive or causal purposes. Moreover, an analytical-explanatory method was used for data analysis, and a desk method was adopted for data collection. The necessary data including the laws of the US Congress and the executive orders of the US President were extracted from electronic databases. The effects of the sanction laws on the political and economic systems of Iran and Venezuela were then clarified through publications and economic data showcasing the economic situations against these two countries.

According to the results of analyzing the economic statistics of the two countries presented in the above table, Iran encountered a decline of 47.9% in its daily petroleum production, whereas Venezuela witnessed a more substantial decrease of 76.9%. In the realm of exportation and importation, Iran experienced a decline of 47.5% and 15.3%, respectively. Similarly, Venezuela encountered a decrease of 48.5% and 44.7% in these areas, respectively. Regarding foreign investment attraction, Iran experienced a decline of 53.86%, whereas Venezuela suffered a more significant decrease of 60.67%. Additionally, the inflation rate in Iran had a significant surge of 277%, whereas it skyrocketed by an astonishing 114,000% in Venezuela compared with the pre-sanction period. In fact, Venezuela is experiencing the highest inflation rate in the Western Hemisphere. Regarding the unemployment rates of the two nations, the situation is somewhat complex. The unemployment rate in Iran only experienced a minimal change in comparison with the period before sanctions. However, in the case of Venezuela, this rate surged by 22.2% compared with the pre-sanction era. In addition, the Iranian rial's value against the US dollar decreased by nearly 303%, whereas the bolivar's value declined by 149%. Lastly, Iran’s economic growth reduced by 235.1% as a result of the sanctions, whereas Venezuela's economic growth decreased by 47%.  Upon the careful analysis of the legislative measures enacted by US Congress and the executive orders issued by the US President, alongside a comprehensive assessment of the economic conditions prevailing in both nations subsequent to the implementation of sanctions, there are evidently notable resemblances in the nature and substance of the sanctions imposed on Venezuela and Iran. However, the adverse outcomes of these sanctions have had more pronounced impacts on Venezuela than on Iran. In relation to the subjects and substances of sanctions, it has been observed that the sanctions imposed on Venezuela primarily focus on industrial sectors such as petroleum, mining, shipping, government officials, and to a certain extent, the banking industry. Regarding Iran, in addition to these areas, financial, nuclear, and military sanctions have been affected. Furthermore, Venezuela has faced sanctions imposed by the US Congress and the US Treasury as well as several European and American states. In the case of Iran, however, the US Congress has been less involved, and there are no multilateral sanctions in place against Tehran. Regarding the rationale behind imposing sanctions on the two nations, it is evident from the findings that Iran has consistently faced allegations of engaging in destabilizing actions in the Middle East, engaging in perilous military endeavors, and pursuing nuclear activities, among other concerns. Nevertheless, Maduro's administration has faced allegations of corruption, repression, and violations of human rights. Simultaneously, it is important to acknowledge that corruption, mismanagement, censorship, and internal repression have consistently served as justifications for implementing sanctions on both nations.

 Conclusion and Suggestion:

According to the analysis of alterations in diverse economic domains including daily petroleum production, export and import activities, foreign investment influx, inflation rates, and other pertinent economic indicators subsequent to the implementation of sanctions, it becomes evident that Venezuela’s economy exhibited a higher degree of vulnerability in comparison with Iran’s. This is due to some factors including Venezuela’s greater reliance on petroleum sources and gold mines as well as the corresponding greater focus of sanction agents on these matters, the country’s severe internal conflicts, the greater scope of Venezuela’s sanctions that of Iran, and Venezuela’s less experience in dealing with sanctions. The foregoing findings do not imply that the adverse economic situations of the two countries since 2017 have been exclusively attributable to the US sanctions, nor do the findings substantiate the complete efficacy of sanctions. Sometimes, incorrect economic policies or the improper implementation of policies, e.g., inadequate budgeting process reforms, failure to decrease dependence on the dollar, lack of diversification in exports (particularly non-petroleum exports), and failure to invest in economic opportunities and platforms, have resulted in dire economic conditions. The overall effects of sanctions on governments are contingent upon a multitude of political, economic, social, and cultural variables as well as domestic, regional, and international circumstances. Hence, despite the implementation of comparable sanctions on two given states, identical outcomes cannot be anticipated. Notably, although sanctions severely weaken the economies of sanctioned nations, the two cases examined in this study (i.e., Iran and Venezuela) demonstrate that the exertion of economic pressure does not change the political conduct of governing bodies. Therefore, it can be argued that, in contrast to the intentions of those who imposed sanctions, the impacts of sanctions will primarily be felt by casual citizens rather than statesmen. In order to have a clearer analysis in this regard, it is suggested to comprehensively compare the experiences of other states under similar sanctions with those of Iran and Venezuela.