When asked to expound their viewpoints on the interrelationship between “business” and “society”, people would normally speak of the innumerable benefits business introduces to each society and the horizons that emerge before the citizens through the initiation of dynamic and profitable business opportunities.
Undeniably, business is a harbinger of prosperity and progress. Business opportunities in agriculture, real estate, retailing and distribution, transportation, production and manufacturing, finance and other sectors give the people the chance to uplift their lives and the impetus to thrive intellectually and financially.
All of us would be excited to hear the announcement that an eminent, accomplished energy firm would be investing in our country to help with the production of electricity through wind power or photovoltaic cells – contributing to sustainable development through fostering business ties. There are few people who wouldn’t rejoice at the news that contracts with multinational business partners would enable their government to renovate the ground transportation industry and set in motion fresh projects for constructing a network of subways throughout the nation. As a concerned citizen, it would be gratifying and heartening for every of us to hear that a big economic power has expressed its willingness to establish joint banks with our nation.
As a result, there’s absolutely no doubt in the magical role business plays in the development and maturity of the societies and wellbeing of peoples. Business is the driving force for a society to make headway in becoming self-reliant, self-sufficient and connected to the web of global capital.
However, what happens if an entire nation, for a prolonged period of time, is systematically stripped of all conceivable business opportunities and every single chance for engagement with the international community? Won’t that society disintegrate and fall apart quickly?
I think I have had the – inauspicious – opportunity to endure such a situation. I’m a journalist and am constantly trying to improve my understanding of global politics. Therefore, it’s almost completely comprehensible to me why my country, for a period of more than 10 years, has been subject to such a “business deprivation” scheme, but I think it would be eye-opening to explore how and why we underwent such an ordeal and how we rose from the ashes of this conflagration that nearly exterminated the welfare and safety of my fellow citizens. So, my story would be a real-life account of how business affects the society!
The Nuclear Controversy: The Beginning of Fallout
In August 2002, controversy broke out between the governments of Iran and the United States over the allegations that Iran was trying to develop a nuclear weapon. Iran vehemently denied the accusations and said it simply pursues nuclear energy for peaceful purposes. Frequent revelations and refutations floated in the air for the weeks to come. The International Atomic Energy Agency would come up with new documents every other week, evidencing Iran’s race towards nuclear weapons, and Iran, for its part, decried the documents as forgery and falsehood aimed at vilifying its civilian nuclear activities.
As diplomatic efforts to settle the dispute failed and the Iran-U.S. tensions spiraled out of control, the UN Security Council, for the first time, passed a resolution concerning Iran’s nuclear program in December 2006 (Resolution 1737) that placed economic sanctions on Iran for its failure to suspend its uranium enrichment activities. The assets of a number of Iranian companies and individuals were frozen and the way was paved for further economic pressures.
Three months later, on March 24, 2007, the UNSC expanded the sanctions on Iran through the resolution 1747. A new round of sanctions came about next year as the UN Security Council passed the resolution 1803 in March 2008, by which a set of severe financial and trade restrictions were enforced on Iran. The UN member states were called by the Council to inspect and intercept “cargo to and from Iran of aircraft and vessels owned or operated by Iran Air Cargo and Islamic Republic of Iran Shipping Line” wherever necessary. It also listed a number of technical groups, machinery factories and industrial firms as blacklisted entities with which the member states were not allowed to do business. The most stringent and rigorous sanctions, however, were put in place in June 2010 when after the escalation of conflicts between Iran and the United States and the European Union, there was virtually no hope that the nuclear controversy could be settled peacefully, and there were serious debate as to the necessity of launching a military strike over Iran’s nuclear facilities; debates that were luckily never translated into action.
By adopting the Resolution 1929, the UN Security Council imposed a set of comprehensive sanctions against Iran, prohibited foreign banks from opening branches in Iran or cooperating with the Iranian banks and also stipulated that the Iranian financial institutions could not operate overseas, set out that the member states should exercise vigilance when doing business with “any Iranian firm,” asked the world countries to refuse to insure Iran’s oil tankers and cargo vessels, and included 40 new Iranian firms in the list of banned companies which the private and public entities of the member states were not allowed to do business with.
However, aside from the UN sanctions, the European Union and individual countries like the United States, Canada, Australia, Japan and South Korea also slapped their own sanctions on Iran, which were in turn far more severe and excruciating.
In January 2012, the European Union agreed to implement a comprehensive oil embargo against Iran. In line with the provisions of this embargo, enforced since July 1, none of the EU member countries would be allowed to import Iran’s oil. This is while countries such as France, Greece, Italy, Portugal and Spain were among the major customers of Iran’s crude. An oil-dependent country that excessively relied on petrodollars for sustaining its day-to-day economy, Iran saw the EU’s oil embargo as the most piercing punishment that could be leveled against it.
Two months later in March 2012, based on an agreement made by the member states of the Council of the European Union, Iran’s relations with the Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT) was cut off and all the banking and financial institutions of Iran were disconnected from the network. This meant that Iran could literally maintain no foreign banking transaction and had to turn to other resorts to get its oil cash.
The U.S. government has been the pioneer of most serious sanctions against Iran. According to the Council on Foreign Relations, the U.S. government imposed extraterritorial or secondary sanctions on Iran that targeted “foreign firms that would provide services and investment related to the energy sector, including investment in oil and gas fields, sales of equipment used in refining oil, and participation in activities related to oil export, such as shipbuilding, ports operations, and insurance on transport.”
There have also been other sanctions including a ban on the sales of passenger aircraft to Iran and a total prohibition of any sort of business with Iranian companies valuing $100 million or above.
How the Sanctions Paralyzed the Iranian Society
Arguably, Iran has been subject to the most wide-ranging and strict economic sanctions regime arranged in the past half a century. I’m not going to delve into the political history of the troubled relations between Iran vs. the United States and Iran vs. the European Union and the backdrop against which the sanctions emerged. As a cursory note, however, I think what complicated the relations and underpinned the imposition of the sanctions was the intransigence of some Iranian officials and their failure to come up with confidence-building measures to reassure the international community that Iran’s nuclear activities were exclusively peaceful. Nevertheless, it’s not part of my discussion here. What I’d like to shed a light on is the impact of these punitive measures, the sanctions, on the Iranian society and the livelihoods of ordinary citizens.
Due to the sanctions, which were none but a campaign of “business deprivation” – in that foreign firms were officially barred from doing business with their Iranian partners and prohibited from investing in Iran’s industries and financial sector, Iran’s currency suffered a terrible, shocking depreciation and lost its value against the U.S. dollar to a great extent. At the height of the tensions, every U.S. dollar was sold for 35,000 Iranian rials. This is while prior to the imposition of the sanctions, every U.S. dollar was sold for a maximum of 10,000 rials. So, when I wanted to buy 1,000 dollars as pocket money for my four-day trip to Calgary, Canada in 2009, I only had to pay 10,000,000 rials, while I paid 35,000,000 rials to get the same amount of U.S. dollars when I wanted to travel to the United States in early August this year. This is simply a tormenting situation for an average citizen who is totally detached from politics, but is influenced as a result of punitive economic policies.
Several factories, assembly lines, firms and industries were forcibly shut down or had to give in to layoffs or restricting their production, manufacturing activities. For example, Iran Khodro, the biggest automaker in the Middle East and once a financial powerhouse, lost much of its revenues and sustained considerable damage as its major partner, the French Peugeot, pulled out its invested capital and unilaterally ended its collaboration with the Iranian company following the EU’s restrictive measures were brought forward.
Although the comprehensive nuclear agreement between Iran and the six world powers, signed on July 14 this year, has ensured the sanctions would be lifted progressively, Iran’s automotive industry is still undergoing the ailment of the sanctions era and Iran Khodro is seeking compensation from Peugeot and Mercedes that abandoned the country’s lucrative market of about 80 million consumers in the light of incremental sanctions. In 2011, Iran was the world’s 13th largest manufacturer of motor vehicles including passenger cars, light commercial vehicles, minibuses, trucks, buses and coaches and was even producing more vehicles than Britain; however, following the introduction of the sanctions, it lost the lion share of its annual vehicle production and dropped 5 spots to claim the world’s 18th rank in 2014, conceding defeat to such competitors as Turkey, Indonesia, Thailand and Czech Republic. From a humanitarian point of view, imagine what would happen to thousands of workers and employees at such a large enterprise as Iran Khodro when it has no option but to reduce its yearly production of motor vehicles by 460,000 units.
The sanctions have taken their toll on the Iranian patients suffering from chronic diseases, including thalassemia and multiple sclerosis as well as different types of cancer, too. Due to Iran’s lack of access to international payment systems and networks such as SWIFT, the Iranian pharmaceutical companies are practically unable to import foreign-made medicine badly needed for the treatment of these patients. In 2013, The Guardian reported that there were about 85,000 Iranian cancer patients who couldn’t receive chemotherapy and radiotherapy because of a scarcity of medical equipment needed to serve them. These equipments were usually brought in from the European countries or the United States and Canada, but with the sanctions being in place, the patients should continue languishing, and maybe submit to death. It was on the news that a teenage boy died of hemophilia in November 2012 after his family failed to find the drugs needed to save his life. Again, the remedy for hemophilia has to be imported from either the EU countries or the United States. This is indubitably a direct impact of business-related policies on the society, but in the most unfavorable and dangerous manner.
I don’t want to upset you more, but unquestionably more Iranian lives would have been saved if Airbus, Boeing, Fokker and Embraer sold their civilian passenger aircraft to Iran. Iran’s aviation fleet is incredibly aging and outdated, and the majority of airplanes owned by Iranian careers were bought before the 1979 revolution – a dreadful record. Every flight with an Iranian airliner is an adventure of swinging between life and death. In the recent years, hundreds of Iranian citizens were killed in frequent air accidents eventually blamed on the technical problems or oldness of the aircraft. It’s simply the mantra of sanctions that prevents these companies from selling their products to Iran. If this is not the impact of business on society – the community of human beings, then what is it?
List of fatal aviation accidents involving Iranian airliners operating outdated, aging planes (2003-2014)
Now, with some $100 billion in frozen assets abroad, Iran’s economy is a ravaged and sick one that needs to await the removal of the sanctions, so that it can get revived. Missed job opportunities and skyrocketing inflation rate have nearly pushed Iran’s economy to death. The inflation rate in 2012, as the sanctions were being intensified, was 45.1% – as reported by the World Bank. If the foreign firms had maintained their robust business with Iran and had not divested from Iran’s economy en masse, the society would not have grappled with so many difficulties. But, that’s not to say I’m putting the blame solely on those who imposed the sanctions. Those politicians in my country who paved the way for the arrival of the sanctions with their adventurous and unprincipled policies are equally responsible.
Business fosters welfare and prosperity in a society in a wonderful manner. The more you do business, the more flourishing and successful you’ll be; this is quite clear to me, as the citizen of a country which was deprived of healthy international business opportunities for at least one decade. But I think not so many people would think about the impacts “business deprivation” can have on the lives of a nation, like my nation, that has contemporarily suffered both as a result of domestic mismanagement and foreign economic sanctions that simply served to demolish the livelihoods of ordinary citizens. Of course those experts who engineered the sanctions against Iran were fully aware of the gigantic benefits international business can entail for such a young, aspiring population, and the catastrophe that may befall them if the business opportunities are denied and taken away.
Sanctions are seen as a means of persuasion, an instrument of forcing change and a legal mechanism for ensuring compliance with the international law. No doubt. But, should they be practiced in such a way that they push a nation of about 80 million to gradual demise and economic bankruptcy, while no change takes place at the policy-making level – the intended goal?
Let’s hope for a day when the business opportunities are provided to all the nations equally and fairly.